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Measuring recovery? Count the employed, not the unemployed

Job seekers meet with a recruiter during a career fair at the Southeast Community Facility Commission in San Francisco, California.
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Job seekers meet with a recruiter during a career fair at the Southeast Community Facility Commission in San Francisco, California.

South Carolina's unemployment rate dropped to 5.3 percent in April, lower than in December 2007, when it stood at 5.5 percent on the eve of the Great Recession.

The share of South Carolina adults with jobs, however, has barely rebounded.

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The same contrast is visible in most states. Unemployment rates, the most familiar and famous of labor market indicators, are nearing pre-recession lows. But the shares of adults with jobs — or employment rates — look much less healthy.

The reason is that the numbers are not quite two sides of a coin. The employment rate counts everyone with a job, while the unemployment rate counts only people actively seeking work. It excludes most people who are unemployed.

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After most recessions, the numbers have moved in sync as the share of the population neither working nor looking has remained fairly constant. But after this recession, the middle ground has ballooned as fewer people try to find jobs.

As a result, the employment rate has become the more accurate indicator of the nation's sluggish and perhaps permanently incomplete economic recovery.

It shows that the economy is improving. Employment rates have climbed above the post-recession nadir in every state, although the improvements are often quite small. In Mississippi, the employment rate is just 0.1 percent above its recent low.

It also shows that the recovery has a long way to go. Employment rates have rebounded in some states with strong growth, like Utah, Nebraska and Montana. But only three states — Maine, Texas and Utah — have retraced more than half their losses.

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(Maine is a curiosity. Its economy has expanded less since 2009 than any state's except Connecticut. Conversely, North Dakota and South Dakota, two of the three states with the most growth over the same period, have seen little recovery in their employment rates — perhaps in part because their losses were relatively small.)

The slow progress hints at a bleak reality. Most economists do not expect employment rates to rebound completely. A growing share of adults is too old to work, because baby boomers are aging into retirement while fewer immigrants are arriving to take their places in the work force. The share of workers claiming disability benefits, or retiring early, also increased sharply in recent years.

— By Binyamin Appelbaum, The New York Times