Employment to population ratio

[PETRUS]

I'm glad for the recent uptick, but at the current rate it will take 15 to 20 years to return to the employment levels of the previous decade. How about some more stimulus and a stronger safety net? Yes, congress, we have our eyes on you.

[xchrom]

1. du rec. nt

[earthside]

2. The other factor ...

... is that even if unemployment declines further, what kind of jobs are people filling? So far it seems to me that most of them pay much less with fewer (or no benefits) than the jobs that folks had previous to the crash of '08.

Couple that with rising taxes, rising fees, high gasoline prices and the cost of health care, tuition, etc., and you could have in effect a continuing recession even with declining unemployment.

And make no mistake, middle and working class Americans are still in a recession. Government statisticians may used out-dated and biased models to determine GDP, but in everyday life we're still in a serious economic downturn.

This is the danger politically for Pres. Obama and Democrats, too. Touting the statistical trend has to be done carefully to avoid appearing out-of-touch with the genuine distress of working America.

[fascisthunter]

3. ouch... this does put things in perspective

I hope it is the beginning of better news, but seeing this is a bit depressing.

[ProgressiveEconomist]

4. IMO yr analysis completely ignores

IMO your analysis completely ignores one of TWO important phenomena that happen to coincide during the five or ten years starting with 2011. One is slow economic recovery after the most significant financial crisis since the 1930s.

But why do you expect employment-population ratios to return to where they were before the financial crisis of 2007-8?

The phenomenon you've omitted from your analysis is that 75 million Baby Boomers were born during the 18 years between 1946 and 1964. The oldest of them started turning 65 in January 2011, at the rate of 8,000 to 11,000 PER DAY (see http://pewresearch.org/pubs/1834/baby-boomers-old-age-downbeat-pessimism ). This historically significant phenomenon will continue for the next 18 years.

Since unemployment rates even for ages 62 to 67 are far below 50 percent, most retirees leave the labor force from EMPLOYMENT, not from unemployment. Now that economic recovery seems to have begun, the proportion of positions formerly held by retirees that are eliminated would decline, and the proportion of such positions being filled with cheaper younger workers would rise. IMO, this phenomenon is an important but completely ignored source of jobs for the unemployed.

Unemployment can decline dramatically without a rise in the employment-population ratio if the unemployed fill jobs abandoned by employed retirees. If this is what is happening, demographic coincidence may be what improves the economy this year enough to re-elect President Obama!

[PETRUS]

7. Interesting point.

And no, I didn't consider baby boomers. Are you suggesting that we could experience a decade or two where lower percentages of the population are employed due to a larger portion of the population living in retirement? That would be fine.

Of course, voluntary retirement for people in their 60s depends on adequate savings, pensions, social security, etc. Unfortunately, I don't have data at my fingertips but my memory of the last study I read had fewer than half of respondents over the age of 60 believing they had enough saved for retirement. So I would expect to see many seniors displaying a preference for work in the coming months (and years, but you're talking 2012 presidential election politics) based on their perceptions of their own needs.

I don't consider current employment data to be an accurate gauge of the president's merit, but you are right that many people might well vote as if they are.

Edit to add: I didn't answer your other question about expectations. Job growth is usually stronger following a recession. It was 300k jobs per month in the two years following the 1981-82 recession, and 340k jobs per month in the two years after the 1974-75 recession. But, as you hinted, financial crises are often thought of as a different animal and I don't know what "should" be expected. My essential complaint is inadequate stimulus and social insurance.

[ProgressiveEconomist]

9. 'Voluntary retirement' will

decline over the next decade or two. The oldest boomers turned 65 this year, 64 in 2010, 63 in 2009, and 62 in 2008. Since the youngest age at which workers can get Social Security is 62, fewer and fewer cohorts of Boomers will have the option to choose voluntary retirement in the next several years.

Many companies have mandatory retirement at age 65. But whether mandatory or voluntary, retirees' jobs will be an important source of work for the unemployed for the next decade, as more and more employers choose to replace retirees with younger and cheaper workers, rather than eliminate their positions.

There is nothing magic about LFP percentages in the low to mid 60s. If you look at BLS data before your graph begins, you'll see LFP rates in the mid-to-high 50s. Part of that comes from Boomers reaching their peak working ages, distorting the age distribution of workers to move LFP up rather than down. But perhaps a more important source of the rise in LFP over time was married women's advancement in the labor market.

The BLS has data to disaggregate your graph by age groups and by gender, to disentangle these issues, but those data are more work to access than the graph you posted. Did you get the BLS download servlet to create the graph for you? I haven't checked your HTML to see whether the BLS is hosting it. Generating disaggregated graphs would be more time-consuming since apparently the more capable older BLS data download facilities are gone.

[PETRUS]

10. I did pull the graph from the BLS website using their servlet.

The page defaulted to a 10-year view but there are stats going back to '48. I'm not sure what time frame would be the most honest for this discussion (because, as you noted, the composition of the labor force has changed since 1950).

I'm interested to hear more from you. Are you trained in economics, as your screen name suggests? I am not - just a layperson who reads a lot of it. What's your take on more stimulus? It seems obvious to me that we'd be better of with a lot more public investment (the usual stuff: education, research, infrastructure).

[emilyg]

5. k/r

[Massacure]

6. How does the age of the population affect this?

The average age of the United States population has increased over the last 10 years, hasn't it?

[PETRUS]

8. It's not a factor in the raw data.

See ProgressiveEconomist's post for some thoughts about that.