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
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
Note that the 55 plus demographic is returning to the workforce in increasing numbers, while the rest of the pool has faltered . . .
What One Low Number Doesn’t Show
OFF THE CHARTS
NYT, April 15, 2006