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Unemployment: Then versus Now

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Floyd Norris wades into the Unemployment debate. Over the weekend, the NYT columnist compared the current unemployment figures -- presently, about 4.7% -- with those of 1983, when the rate was exactly double, at 9.4%.

Norris' conclusion?  Look beyond the published headlines:

"IN the summer of 1983, the United States was just starting to come out of a brutal recession and the unemployment rate was 9.4 percent, twice what it is now in a recovery that has gone on for more than four years.

But men in the prime of their working lives — 35 to 64 — were more likely to have jobs in the summer of 1983 than their successors in that age group are to have jobs now.

That is one reason it is necessary to look beyond the published unemployment rates to get a more accurate picture. The published unemployment rates count as unemployed only those who are actively looking for work. Those who have given up looking, or do not want to work, are not counted."

Looking beneath the headline to the data dispersion is instructive. As you may have suspected, the labor pool continues to shrink, even as the population has grown:

"In the last six years, the trends have turned around. Even though the unemployment rate last month was 4.7 percent, not much higher than it was in March 2000, the percentage of people working has fallen in every age group except the highest ones. Men and women above 55 are more likely to be working now. Again, it is not easy to tell whether that reflects a greater opportunity or a greater need for income.

What that means is that younger people are significantly less likely to have jobs now than they did six years ago. Thus, it should be no surprise that in the Conference Board's consumer confidence survey, the number of respondents who think jobs are plentiful now is barely half the number who thought that in March 2000.

So how can the unemployment rate be so low? Fewer people say they want to work. The labor force — those with jobs or saying they want one — is rising at a much lower rate than the working-age population. The rest do not count in the unemployment figures, but that may not mean they are happy about being unemployed."

None of this should be unfamiliar to regular readers of this blog; However, the fact that the NYT (and others) are now printing this -- rather than merely trumpeting the misleading data headline -- is an encouring development for fans of financial media and economic data analysis . . .

Here's the demographic breakdown of the labor pool:

click for larger table

Graphic courtesy of NYT

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Note that the 55 plus demographic is returning to the workforce in increasing numbers, while the rest of the pool has faltered . . .

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Source:
What One Low Number Doesn't Show
OFF THE CHARTS
FLOYD NORRIS
NYT, April 15, 2006
http://www.nytimes.com/2006/04/15/business/15charts.html

Monday, April 17, 2006 | 06:16 AM | Permalink | Comments (22) | TrackBack (3)
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Comments

Charles Murrary uses labor force participation extensively in his research. Looking at these number broken down by race is a real eye opener.

Posted by: Curtman | Apr 17, 2006 8:30:59 AM

"The published unemployment rates count as unemployed only those who are actively looking for work."

True. But, this was also the case in 1984. Today, we have more entrepreneurial activity than at any time in our history as evidenced by the record number of new business formations (partnerships and LLCs).

Posted by: Larry Nusbaum, Scottsdale | Apr 17, 2006 8:38:09 AM

Women also factor in to this. I'm trying to convince my wife to go back to work so I can count myself out of the labor pool.

Posted by: JoshK | Apr 17, 2006 9:30:44 AM

"we have more entrepreneurial activity"

Does your number include all the people fired at IBM and HP and wherever that have their "old" job" as a "contractor" at half the pay and no benefits?

And remember , wehn those companies dismiss the contractorrs, they are entrepreneurs, not fired workers, so again they don't count.

"Note that the 55 plus demographic is returning to the workforce in increasing numbers"

After they have been fired in their 50-55 range, they return to take the low pay jobs that the kids used to do. It's not like this is a good thing.

Posted by: me | Apr 17, 2006 9:41:07 AM

The left like to claim that a lower labor force partipation rate is a sign that the job picture is so bleak that workers are discouraged. Another possbility is that the economy is doing so well that there are a large number of people who don't really need to work i.e. the spouse or whoever is making enough money that they really only need one worker.

Posted by: Gordon Haave | Apr 17, 2006 10:55:00 AM

How long until someone suggests that this is all the fault of feminists?

Posted by: NJG from NYC | Apr 17, 2006 11:00:53 AM

Hey 'Gordon, can Ihave some of what you are smoking? It is good shit man.

Posted by: me | Apr 17, 2006 11:06:49 AM

I'm glad you included the distribution graphic.

Gordon, given that real wages are down since the 70s, I'm with the previous poster: that's some super dank, extra kind bud you be smokin. There are enough shills for this administation already, but you're welcome to join to the clownshow.

Posted by: Alaskan_Pete | Apr 17, 2006 11:37:44 AM

Many of the 55+ demographic are motivated to return to the workforce, to some degree, to get health insurance. In five years, 500% as many 55-64 women are returning compared to the same age of men. It would be interesting to know how many of those women have an employment displaced husband at home.

Posted by: Trav | Apr 17, 2006 11:38:15 AM

Larry: 'me' beat me to it, but from limited empirical evidence from acquaintances it looks like job contracting (not sure that qualifies as entrepreneurship in your book) is a necessity made into a virtue, as in good paying jobs with benefits are harder to come by, and are being replaced by contract "opportunities".

One variation of this is companies with good pay and benefits going through temp agencies instead of hiring directly. No pay/benefits discrimination, you know.

Posted by: cm | Apr 17, 2006 12:27:01 PM

I think it's 'Trav' that's smoking something - how many of these returning workers 55 and older are stepping into jobs with full health insurance? Gimme a break...

Older workers need the extra dough to make a payment on the Mcmansion, pay junior's tuition, fill the SUV with gas, or more to my point, pay the incredibly high premium on THEIR OWN privately purchased health insurance.

Posted by: drey | Apr 17, 2006 12:53:19 PM

Just walk into your local grocery store. When I was in high-school and working at the corner grocery, everyone was high-school age except the managers. These days far more cashiers and baggers are over 50 than under 20. That should tell us something.

Posted by: Anonymous | Apr 17, 2006 12:54:25 PM

Hussman on the Hindenburg omen:

http://www.hussman.net/wmc/wmc060417.htm

As it happens, we observed a Hindenburg on April 7th (just 2 days after the market high) and another one on April 10 . . .

Posted by: GRL | Apr 17, 2006 1:02:45 PM

The reason 55 year old have higher rates is likely fear of age discrimination suits when laid off. Now most are laid off in their 40s to minimize the chance of one. They don't have higher hiring rates, only lower layoff rates.

Posted by: Lord | Apr 17, 2006 2:26:23 PM

Lord: Interesting point, any data to back it up? I heard of cases where individuals were bullied, pardon me,"offered" to quit (not as part of a formal layoff), along the lines of "we give you the choice of whether you want to quit or be terminated, depends what you want us to say when we get an employment verification call" -- perhaps not that blatantly stated. I presume this should fly with more of the older folk than the younger for cultural reasons. Bottom line, I wouldn't give too much credence to reason-of-separation statistics.

I can also imagine that perhaps voluntary separations are lower, for lack of alternative career prospects and not unrelated risk aversion, and of course early retirement plans coming apart. Unless there are clear indicators that it's the layoff thing you cite.

Posted by: cm | Apr 17, 2006 3:35:12 PM

"how many of these returning workers 55 and older are stepping into jobs with full health insurance? Gimme a break..."

Tell me you are not serious? What world do you guys live in?

A of couple years ago I was talking to a bus driver for Disney. He is retired executive from P&G. He thought he had company paid healthcare for life until the lying bastards stole it from him. He drive a bus for and started at $8 an hour and worked his way up to $10, but as a diabetic he does it for the health insurance. Of course like others now, Disney is going to more of a part time workforce, not elgible for benefits.

Posted by: me | Apr 17, 2006 7:52:27 PM

Now that's cheery....

Posted by: Smiley | Apr 17, 2006 9:07:13 PM

I know many people working pretty much to get health insurance. I have a friend who ran his own tree trimming business for years, self-employe, who nopw works at Home Depot mainly for the insurance. I'm sure many others are in that boat.

I'm in that lucky category of those women who don't need to work since their husbands make more, been turning down contracting work for a while now. My 20 year old son can't get hired anywhere, all his friends work minimum wage jobs that are working. Also have a 16 year old not working, tho some of his friends do, also for minimum wage.

Yeah, great economy. I'm so glad I have savings and don't need to work in this "great economy". I really wonder what decent-paying jobs are going to be there for my kids when they finish college.

Posted by: donna | Apr 17, 2006 9:13:02 PM

donna: A friend of a friend, a higher-middle manager in a successful corporation, recently announced in a small circle he wants to retire (not sure whether serious or just thinking out loud). To the question whether his wife should be the single bread winner of the family he said, no, more importantly the benefits winner.

Posted by: cm | Apr 17, 2006 11:01:54 PM

There's a couple of obvious factors:

1) More younger people are going to college. Alot of them are going back for 2nd graduate type degrees.

2) IMO it seems like more and more companies are looking for more experienced workers. I think it's harder to get a job now for someone with out experience (i.e. the younger job seekers).

3) Instead of pure wages more and more companies are basically required to throw in benefits health insurance, 401k, etc etc... which basically comes out of your wage.

I'm a 24 year old med student who is graduating medical school in 2 months. I was looking at jobs while I take a year off before starting at residencies, and despite having an MD there doesn't seem to be many decent paying jobs that I could land for the simple lack of experience factor. Couple that with unemployment being at a 4 year low, I really thought this would be alot easier. I honestly would almost be better served to take my chances and day trade for a year.

Luckily I'm in that position where I can afford to do something like that, but I have friends who've graduated from good schools over the last few years and still have trouble getting solid jobs.

Posted by: Dave | Apr 17, 2006 11:50:29 PM

Dave: Sounds not unfamiliar. In what I can see of tech there is an additional twist -- companies are looking for a (too narrow?) band of experience -- enough to be able to contribute without much guidance, but not too much to have "attitudes" about not doing crap jobs, or being seasoned enough that bullshit won't fly. And at least from my vantage point I see a fair amount of "aiming too high" in terms of credential level and experience considering the job descriptions and perceived career prospects, judging by the ratio of declined offers vs. successful hires (I have reason to believe it's not primarily the money, but how would I know).

Posted by: cm | Apr 18, 2006 2:04:08 AM

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Posted by: Divorces | Jan 7, 2008 2:53:44 PM

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