Karl W. Smith is a Bloomberg Opinion columnist. He was formerly vice president for federal policy at the Tax Foundation and assistant professor of economics at the University of North Carolina. He is also co-founder of the economics blog Modeled Behavior. Read more opinion LISTEN TO ARTICLE 3:02 SHARE THIS ARTICLE Share Tweet Post Email

Photographer: Spencer Platt/Getty Images North America Photographer: Spencer Platt/Getty Images North America

Since the Great Recession, the U.S. economy has fared better than its peers in most respects, but by one metric it is failing: Too many Americans who want jobs don’t have them. This year’s hiring slowdown should strengthen the resolve of the Federal Reserve to continue pushing for faster growth.

Before the dot-com bust, the U.S. employed a higher percentage of its prime-age population than peer countries such as Germany, Japan and the U.K. The last two recessions, however, hit prime-age employment hard in the U.S., and its economy has yet to fully recover.

U.S. Prime-Age Employment Is Lagging The percentage of the U.S. population aged 25 to 54 that is employed compares unfavorably to its economic peers Source: Federal Reserve Economic Data

A partial explanation is that labor-market regulations in Germany and employment norms in Japan protected prime-age workers at the expense of younger workers. Yet youth employment in those countries is now at U.S. levels, while prime-age employment in the U.S. has remained stuck at least five percentage points below its peers since the end of the Great Recession.

U.S. Youth Employment Is Also Lagging The percentage of Americans aged 16 to 24 who are employed is converging with the figures for Japan and Germany Source: Federal Reserve Economic Data

A couple theories have been put forward to explain this divergence. One suggests that the issue is lack of willing workers. The percentage of prime-age men who either have a job or say that they want a job — the labor-force participation rate — peaked in 2000 and continued to fall throughout most of the recovery.

In 2016, business professor Erik Hurst argued that video games might be part of the problem, saying that they had become so compelling that many men in their 20 were choosing to stay at home in their parents’ basements playing video games rather than look for a job. As that cohort of young men grew older, their weak attachment to the labor market would continue to haunt them, and the overall prime-age employment in the U.S. would fall.

Almost on cue, however, the male labor-force participation turned upward in late 2016. The male labor-force participation still has a long way to go, but the stronger economy has encouraged young men to move out of their parents’ house and get a job.

At Least Men Are Returning to the Workforce in the U.S. The percentage of men aged 25 to 54 who either have or are looking for a job has been rising since 2016 Source Federal Reserve Economic Data

A second theory blamed a shortage of skills: There are people who could be drawn into the labor force but lack the required skills. An increasing share of employers has complained that their primary difficulty is finding qualified workers.

It’s certainly true that employers can’t afford to be as picky as they once were. However, if the skills shortage was the main problem, then wages for higher-skilled workers should be accelerating as employers compete for the limited supply. And while wage growth has picked up over the past several years, it’s still not higher than overall inflation. Moreover, wage growth has been strongest for lower-skilled workers. That’s exactly the opposite of what economists would expect.

Nor does lack of skills seem to be holding back employment elsewhere around the world. In Germany, for example, the prime-age employment rate for those with only a high school diploma is 84% — compared to 70% in the U.S.

The most likely explanation is that while the recovery has been very long and unemployment is very low, the U.S. economy has still not fully recuperated from the Great Recession. There is no credible reason why the U.S. can’t match or exceed its peak employment rate, just as its peer countries have done. The Fed and the federal government should continue to stimulate the economy until every American who wants a job has one.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.