Brookings Institution (12/26/12) Gary Burtless

Employment continued to improve modestly, unemployment edged down, and wage gains were approximately equal to price inflation in 2012. The health of the job market is improving at a steady but comparatively slow pace. Jobless workers have seen improvements in their chances of finding a job, but wage and benefit improvements have lagged behind gains in worker productivity. On average, total public and private payrolls increased 157,000 a month, which was fast enough to reduce the unemployment rate over the year. The labor force participation rate fell 0.4 percentage points to 63.6% in the twelve months through November 2012, the sixth consecutive year it has declined.

The continued decline of the participation rate is an indicator of a continued shortage of job vacancies. About half of the drop in the participation rate since November 2006 can be traced to the graying of the population. Adults between 25 and 44 have the highest labor force participation rates, and they are a shrinking percentage of the adult population. People older than 55 have much lower participation rates, and they represent a growing fraction of the population.