There's a worrying trend in the job market that the recovery is hiding

There were 5.13 million job openings in February, the most in 14 years. This report follows last week’s March jobs report, which showed that fewer jobs than expected were created during the month.

In a recent note to clients, Gluskin Sheff’s David Rosenberg highlighted that even though the unemployment rate has plunged, fewer people are actually interested in working.

“The number of Americans now outside the labour force is over 90 million — that exceeds the entire German population,” Rosenberg wrote.

“The share of the population that is out of work and not looking for work is quickly heading to an unprecedented 38%. The number of these folks that actually want a job is down over the past year and those who do not want a job even if one is available for them has begun to swing higher.”

And it’s not because people are leaving the labour force out of frustration, Rosenberg wrote.

So why don’t people want to work?

First, Rosenberg argues, a welfare system that can provide more for an individual in one year than a job as a full-time administrative assistant.

Secondly, demographics: baby boomers are leaving the labour force at a faster pace than other age groups as they hit their “golden years.”

And finally, the share of unemployed people who have been out of work for 27 weeks or more is still higher than its pre-recession level. The longer they are out of work, the more their skills erode.

“The job market is not being dampened by any deficiency of demand,” Rosenberg wrote.

“Job openings have risen to 15-year highs. The problem, cross referencing the JOLTS data and the NFIB small business surveys, is that companies are experiencing more and more difficulty over time in finding suitable applicants.”

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