The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.
- BLS Handbook of Methods
- Bureau of Economic Analysis
- Bureau of Labor Statistics
- Congressional Budget Office
- Economic Data - FRED® II, St. Louis Fed
- Office of Management and Budget
- Statistics: Releases and Historical Data, Board of Governors
- U.S. Census Bureau Economic Programs
- White House Economic Statistics Briefing Room
June 02, 2007
Is Unemployment Worse Than You Think?
Most of us think about the unemployment rate going down due to more people getting jobs. But there's also another way the official unemployment rate can go down. It happens when the denominator -- the bottom number of the fraction -- goes down.
And that is what has been occurring again recently. The Labor Pool has shrunk, making the unemployment rate look better than it actually is.
I dunno. Here's a look at the labor force participation rate for the civilian population, aged 16 and over:
It is certainly true that the participation rate has been heading down over the course of the year. In the longer view, however, the change looks pretty unexceptional. If you break things down by age, you see some pretty standard looking variation in the participation of prime-age workers...
... and yet another pronounced slide in the participation rate of 16-19 year olds:
That drop in the participation rate of teenagers accounts for about one-third of the decline in the overall participation rate. What's more, the participation rates of individuals over 55 have been essentially flat, a marked change from the last decade over which those rates steadily rose. Combined with the declining rate of the youngest group of workers, the tailing off of participation among AARP-aged workers is enough to explain the entire decline in the aggregate participation rate since the beginning of this year.
You might define "recently" as "since 2000 or so", and there you would be justified in claiming a broad-based decline in the number of people choosing to participate in U.S. labor markets. But I use the word "choosing" intentionally, as I'm convinced that the post-2000 changes in labor force participation rates (or employment-to-population ratios, if you like) reflect trends that are largely independent of the business cycle.
You may not join me in that belief, but broader unemployment measures -- those that account for discouraged workers, marginally attached workers (those not listed in the labor force, but who nonetheless say they want work), and part-time workers who say they would like full-time work -- don't suggest that the standard unemployment statistics are leading us astray:
Is unemployment worse than we think? I kind of doubt it.
TrackBack URL for this entry:
Listed below are links to blogs that reference Is Unemployment Worse Than You Think?:
» Unemployment and the credit cycle from Interfluidity
Much of the chatter surrounding the latest BLS release has focused on a spike in the denominator of the unemployment statistic, the fraction of the population either working or actively looking for work. Courtesy of the indispensible [Read More]
Tracked on Jun 8, 2008 1:49:53 PM
- Is Wage Growth Accelerating?
- Unemployment Risk and Unions
- Cumulative U.S. Trade Deficits Resulting in Net Profits for the U.S. (and Net Losses for China)
- The Slump in Undocumented Immigration to the United States
- A Quick Pay Check: Wage Growth of Full-Time and Part-Time Workers
- Back to the '80s, Courtesy of the Wage Growth Tracker
- Introducing the Atlanta Fed's Taylor Rule Utility
- Payroll Employment Growth: Strong Enough?
- Forecasting Loan Losses for Stress Tests
- Men at Work: Are We Seeing a Turnaround in Male Labor Force Participation?
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- Business Cycles
- Business Inflation Expectations
- Capital and Investment
- Capital Markets
- Data Releases
- Economic conditions
- Economic Growth and Development
- Exchange Rates and the Dollar
- Fed Funds Futures
- Federal Debt and Deficits
- Federal Reserve and Monetary Policy
- Financial System
- Fiscal Policy
- Health Care
- Inflation Expectations
- Interest Rates
- Labor Markets
- Latin America/South America
- Monetary Policy
- Money Markets
- Real Estate
- Saving, Capital, and Investment
- Small Business
- Social Security
- This, That, and the Other
- Trade Deficit
- Wage Growth