The November jobs report looked pretty good on the surface except for one number that popped off the page: 95 million.
That's the number of Americans now counted as not in the labor force, a historic high that has confounded economists and policymakers. The total — 95.06 million to be more exact — has been rising consistently but surged by a gaudy 446,000 last month.
The jump occurred as the U.S. economy added 178,000 jobs and the headline unemployment rate dropped sharply.
Explaining the consistent increase in those leaving the labor force is complicated, with factors divided between an aging and rapidly retiring workforce, a skills gap that leaves job openings unfilled, and the nettlesome problem of too many people who find it's just easier to collect welfare and other transfer payments rather than go back to work.
"WTF are so many of them doing?" Peter Boockvar, chief market analyst at The Lindsey Group, said in a note after the nonfarm payrolls report. Boockvar used a crude online expression that nicely sums up the continued frustration with America's shrinking labor force.
In a subsequent interview, he acknowledged the issue is many pronged and poses a long-term obstacle for economic growth.
"It's a combination. There's no question a lot of them are retirees," Boockvar said. "No one wants to say, 'I want to get fired and sit on my butt.' But when people do lose their jobs, they're not being incentivized enough to go back to work compared to the benefits they get by not being at work."
Indeed, the U.S. saw an explosion in benefits during the Great Recession that has receded only mildly during the recovery.
For example, the level of those enrolled in the Supplemental Nutrition Assistance Program — food stamps — has remained elevated even with an economic expansion that is nearly 7 ½ years old. SNAP recipients totaled 33.5 million in 2009, the year the recession ended. In 2016, the number is at 45.3 million. The government shelled out $74 billion in benefits last year, about double the level of 2008.
Taken together, the numbers show that there's more to meets the eye than a headline unemployment rate of 4.6 percent, the lowest since August 2007. Because that number ignores those not in the labor force, as well as workers at part-time jobs for economic reasons, it doesn't tell the whole story. A broader jobless measure is at 9.3 percent.
"I have a problem with people saying we're at full employment," said Dan North, chief economist at Euler Hermes North America, a trade credit insurance company. "We have a record 95 million people sitting on the sidelines. To me, that's hardly full employment."
The structural issue is what North calls the "silver tsunami of retirees" or those 10,000 baby boomers a day leaving the workforce and heading for retirement.
But that's only one more part of the problem. Another big issue is the skills gap for employers struggling to find workers to fill positions.
Job openings in September were at 5.5 million, though hires were at just 5.1 million, according to the Labor Department.
"Employers have lots of jobs open but can't find the right people to fill them. That's certainly a part of it as well," North said.
Companies are trying to be creative in that respect. Some strategies they are employing include reducing prerequisites for jobs — allowing, say, associate degree holders for jobs that formerly required bachelor's or master's degrees — while also focusing on job training and flexible hours.
That carries its own risk by allowing workers with a steeper learning curve on the job. But the current labor force condition is mandating innovative solutions, and compromises.
"It's a great thing for the candidate that's getting an opportunity, especially for the millennial who's interested in career growth and job changes every couple of years. For the employers, it's good in a sense to seek a new perspective from the labor pool," said Amy Glaser, senior vice president at Adecco Staffing, a recruitment and workforce solutions firm. "From a change management perspective, it's really difficult for the employer. It requires a lot of patience, creativity and open minds to look at things."
Glaser believes the various factors at play aren't going to go away anytime soon.
"There's not a quick fix," she said.