Unemployment: Then versus Now

Monday, April 17, 2006 | 06:16 AM

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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

Nyt_unemployment_

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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» Missing the story from The Everyday Economist
A recent New York Times article dicussed the current state of economics and contrasted it with that of the 1980s: 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, t... [Read More]

Tracked on Apr 18, 2006 9:29:24 AM

» Generation Debt - college was a mistake? from I Love Everything
"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 workin... [Read More]

Tracked on Apr 18, 2006 1:48:50 PM

» Opening Bell: 4.19.06 from DealBreaker.com
Yahoo! Hits the Spot, Bubble Back (TheStreet.com) Yes, there's an overabundance of bubble talk these days, sorry. Yesterday Yahoo! reported earnings that were in line, with guidance that was in line as well, and the stock spiked after hours.... [Read More]

Tracked on Apr 19, 2006 8:23:49 AM

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

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