UNEMPLOYMENT PUZZLER

I live in a low-wage city in a low-wage state and I've been unimpressed with the local job market since I came here over 8 years ago. When I look at the unemployment statistics during the Bush Administration, I've been surprised at the disconnect between the low numbers and the local and national employment conditions. Wages have largely been stagnant and household debt has increased dramatically, indicating that many life styles are being supported by debt, not income.

Mark Thoma links to this NYT article that points out that percentage of men aged 25-54 not working in this decade is at a post-war high:

...the average unemployment rate in this decade, just above 5 percent, has been lower than in any decade since the 1960s. Yet the percentage of prime-age men (those 25 to 54 years old) who are not working has been higher than in any decade since World War II. In January, almost 13 percent of prime-age men did not hold a job, up from 11 percent in 1998, 11 percent in 1988, 9 percent in 1978 and just 6 percent in 1968.

This graph shows both the unemployment rate and the non-paeticipation rate since 1978. Note the peak in 1983.