Thing is, whether people like it or not, the performance of the local American economy simply does not mean what it used to decades ago. Everything and everyone is linked. The terrible truth is that most of the world is doing more QE while we are fretting about 1/4 pte of + increase. China is in crisis and we, and most of the west, are dependent on them. It is an unprecedented situation but local economists cannot face the facts. The world is saturated with supply. This is not an environment at risk of inflation. Unchartered territory.
1
I find that looking at the economy through energy and resource constraints gives a much better picture than looking at monetary policy. Some thoughts:
We used to pump oil out of the ground, now we have to steam it out of shale rocks or drill thousands of feet under the ocean.
We used to dig a well and sufficient water would spring out, now we need expensive desalinization to meet our needs.
Farmers are destroying valuable topsoil to grow corn to turn into ethanol. By the time the corn is turned into ethanol it needs as much as energy as generated by the ethanol, but this keeps the farmers happy.
People waste more and more gas and waste more and more time in traffic jams trying to find affordable housing farther away from city centers.
If you look at GDP growth from 1950 to the present, it shows a steady declining trend. How can monetary policy impact a 60 year trend? Wouldn't an intelligent economist realize there is something bigger going on here/
Bottom line, as the world gets fuller and more depleted, it does not make sense to believe that the economy will grow at high rates and support better life styles per capita. There are diminishing returns involved here.
We used to pump oil out of the ground, now we have to steam it out of shale rocks or drill thousands of feet under the ocean.
We used to dig a well and sufficient water would spring out, now we need expensive desalinization to meet our needs.
Farmers are destroying valuable topsoil to grow corn to turn into ethanol. By the time the corn is turned into ethanol it needs as much as energy as generated by the ethanol, but this keeps the farmers happy.
People waste more and more gas and waste more and more time in traffic jams trying to find affordable housing farther away from city centers.
If you look at GDP growth from 1950 to the present, it shows a steady declining trend. How can monetary policy impact a 60 year trend? Wouldn't an intelligent economist realize there is something bigger going on here/
Bottom line, as the world gets fuller and more depleted, it does not make sense to believe that the economy will grow at high rates and support better life styles per capita. There are diminishing returns involved here.
6
Mr. Irwin and Readers: May I add three quick points. 1) The average hourly earnings increase is reduced a bit when the decline in the average work week from 34.6 hours in Oct. to 34.5 hours in Nov. is taken into account. Thus, at $25.25 per hour in Nov., weekly wages would amount to $871.13, in contrast to weekly wages of $872.27 at Oct.'s $25.21 per hour rate. Thus, for Nov., weekly wages actually declined slightly, by -0.1% from Oct. Compared to last year, again on a weekly, instead of hourly wage basis, weekly wages were up by +2.0%, I think; the difference due to a reduced hourly work week. 2) Part time employment jobs, according to the household survey, increased by +319,000 persons in Oct., whose cause was attributed to economic reasons; which seems to agree with the small decline in average weekly hours worked. 3) The temporary help sector, which is often a lead indicator for future permanent hiring, lost -12,300 jobs in Nov. [Sat. 12/05/2105 11:42 a.m.]
3
As most of the comments point out, there is still not enough demand in the economy for employees to make older workers candidates for hiring.
We still have a generation of younger workers out of the market in graduate school waiting out a slow job market. Or underemployed, and living with parents.
Trying to explain the employment statistics with "skills mismatch", "retiring boomers", "millennial life style changes", is using false narrative to escape addressing some fundamental changes in the US market for labor.
It's not something the Fed can fix either. Nor is training everyone for a Tech job a quick fix. "Working in a startup" is code, in many cases, for working for free. It's Silicon Valley Speak for dealing with its excess labor force, and these are people that are considered in economic statistics as "employed".
We still have a generation of younger workers out of the market in graduate school waiting out a slow job market. Or underemployed, and living with parents.
Trying to explain the employment statistics with "skills mismatch", "retiring boomers", "millennial life style changes", is using false narrative to escape addressing some fundamental changes in the US market for labor.
It's not something the Fed can fix either. Nor is training everyone for a Tech job a quick fix. "Working in a startup" is code, in many cases, for working for free. It's Silicon Valley Speak for dealing with its excess labor force, and these are people that are considered in economic statistics as "employed".
9
I'm so glad to have my own degree in economics; in the 60's and 70', the cost of the Vietnam war gave us stagflation. Who rationally believes that our endless war on terror won't have economic costs? Wages haven't been rising, so some of us are already paying the price.
The oil price spikes after the '73 embargo left us at the mercy of those who consider us infidels, and despite finding enough fuel here, we're still involved militarily in a region where no one can ever win.
Soon, the world will own us and we'll join every empire in obscurity. Greece once dominated their region but now, can't protect their own people on Cyprus. Learn at least one foreign language if you want to thrive in the new normal or master technology.
Success can also be gained by less moral means; when the Supreme Court stopped the vote count in Florida and few of us demonstrated, we became a banana republic. So corrupt a politician, you probably won't get caught and your children won't care how you supported them.
The oil price spikes after the '73 embargo left us at the mercy of those who consider us infidels, and despite finding enough fuel here, we're still involved militarily in a region where no one can ever win.
Soon, the world will own us and we'll join every empire in obscurity. Greece once dominated their region but now, can't protect their own people on Cyprus. Learn at least one foreign language if you want to thrive in the new normal or master technology.
Success can also be gained by less moral means; when the Supreme Court stopped the vote count in Florida and few of us demonstrated, we became a banana republic. So corrupt a politician, you probably won't get caught and your children won't care how you supported them.
3
It's sad to see economics and financial sections play up the weekly and monthly employment and other numbers as if the variations had some great significance - they don't. If you look at the totals (for example FRED:PAYEMS for employment) what you see is remarkably steady but slow growth since 2010. The variations could be sampling error. Let's hope the people at the Fed who actually make the decisions are smarter than the columnists and reporters. Irwin is among the few who get this right - there is no news pointing either way.
2
The unstated issues with the article are four fold. First, automation and out sourcing have had a significant impact on the types of available jobs and participation rate. The jobs displaced by automation and out sourcing are not coming back. Second is the complaints about the measure of unemployment. The complaint is misdirected since the same agency also puts out 6 other measures of unemployment that are rarely reported in the media. Third, there is a growing mismatch between job requirements and the skills of the people at the local, regional and national level. Fourth is age. Not only is the workforce aging and the big bulge in the work force is baby boomers like myself, but who is willing to hire someone over 55? I was able to retire on my savings, a super majority of baby boomers cannot and if they are working, are remaining on the job.
2
Irwin really needs to get beyond gloomy rhetorical generalities like those in his last paragraph. The economy is in pretty good shape as has been obvious for at least two years. The Fed according to Bernanke has about 50 leading indicators on its dashboard while most of the rest of us who are interested have to make do with about ten. Virtually all of them are positive and even the ones that are negative are negative in a relatively good sense. Irwin brings up the labor participation rate but there is something odd going on here. Apart from the fact we know the overall numbers are being distorted by boomers reaching retirement age the Fed's regional reports tell of tightening labor markets more or less everywhere. They can't both be right.
1
The large drop in employment/population applies to working-age people, so it is not boomers retiring. This many people pulling out of the work force should actually be putting lots more pressure on wages and also U-3 unemployment. The signs of tightening labor markets do not include wages. There is something odd going on, but it's not likely to be the wage data. Neither Irwin nor anybody else knows enough about this - or about the effects of interest rates at these levels - to say much beyond platitudes.
4
@skeptonomist
Wages are going up at the rate of about 2% a year which may not satisfy a lot of people but is actually not a bad rate in a low inflation environment and it's one of the factors contributing to the generally goldilocks climate in which the economy finds itself.
Wages are going up at the rate of about 2% a year which may not satisfy a lot of people but is actually not a bad rate in a low inflation environment and it's one of the factors contributing to the generally goldilocks climate in which the economy finds itself.
1
This skeptic is unaware of a 2% year over year increase in wages. The available data does not indicate wage inflation as you have so sternly posted. Your source?
1
Many industries are contracting out and not paying benefits so taken for granted and expected by many state and city employees. Other companies are having a tremendous amount of outsourcing to save money. The openings for jobs such as healthcare with our aging population is fine however; not everyone is cut out for a healthcare career. The numbers can be interpreted in several ways.
1
To raise or not to raise that is the question.
Whether 'tis Nobler in the mind to suffer
The Slings and Arrows of outrageous
employment numbers…
Or to take Arms against a Sea of troubles,
And by upping interest rates end them:
to say we end
The Heart-ache, and the thousand Natural shocks
That Flesh is heir to?
Whether 'tis Nobler in the mind to suffer
The Slings and Arrows of outrageous
employment numbers…
Or to take Arms against a Sea of troubles,
And by upping interest rates end them:
to say we end
The Heart-ache, and the thousand Natural shocks
That Flesh is heir to?
Mr. Irwin, the real danger to the economy is that it (and the market) is standing on a base of narrowing breadth. The last bubble to pop is in healthcare (i.e. it has become too pricey for the majority of Americans).
Think about the past 15 years. What market implosions have we had already? Tech/media/telecom, real estate, finance, energy/commodities. What is left?
Playing around with interest rates will DO NOTHING to improve the economy. Economies are made of people, goods and services. Money is just a MEASURE of the value of those real world persons and goods/services. Economists and corporate types seem to get frequently lose sight of the fact that the goal is to get the economy working STEADILY AND FAIRLY. The money portion will take care of itself if you deal with those things first.
I think this is common sense to anyone but the eggheads and corporate MBAs.
Think about the past 15 years. What market implosions have we had already? Tech/media/telecom, real estate, finance, energy/commodities. What is left?
Playing around with interest rates will DO NOTHING to improve the economy. Economies are made of people, goods and services. Money is just a MEASURE of the value of those real world persons and goods/services. Economists and corporate types seem to get frequently lose sight of the fact that the goal is to get the economy working STEADILY AND FAIRLY. The money portion will take care of itself if you deal with those things first.
I think this is common sense to anyone but the eggheads and corporate MBAs.
3
After reading this job report went back to read more articles and read these:
US exports /Imports deficit now at 43.4 BILLION- we are importing this much more.And the dollar keeps rising. TPP and TTIP how will they be good for Americans again?
China creates it's own 'World Bank'. Didn't they just join the IMF at 11% partner?
GM to Import Buick's from China.Hoping they are as well built as they were in America.
Mexico is going to build all small vehicles for Ford?
Seems every time I read more about how well our economy is doing,I keep asking myself what are Americans producing to help our economy to be come stronger for Americans?Where are American workers in this picture?
US exports /Imports deficit now at 43.4 BILLION- we are importing this much more.And the dollar keeps rising. TPP and TTIP how will they be good for Americans again?
China creates it's own 'World Bank'. Didn't they just join the IMF at 11% partner?
GM to Import Buick's from China.Hoping they are as well built as they were in America.
Mexico is going to build all small vehicles for Ford?
Seems every time I read more about how well our economy is doing,I keep asking myself what are Americans producing to help our economy to be come stronger for Americans?Where are American workers in this picture?
5
Tax the rich.
Tax the rich.
Tax the godalmighty rich.
Tax the rich.
Tax the godalmighty rich.
2
Where will the rich get cash to pay the taxes?
Sell their investments, such as stock, or real estate, to whom - the less rich? Who will get the cash to buy it where? Sell their stock, or real estate, the price of which has been pushed down by the rich selling it to them?
More dis-investment? Like maybe to the Chinese, who will then own more of the country and rent it to the rest of us for money we pull out of our economy to pay them? Will they finance start-ups here to replace the ones our rich can't? Or do we just all lose more?
Sell their investments, such as stock, or real estate, to whom - the less rich? Who will get the cash to buy it where? Sell their stock, or real estate, the price of which has been pushed down by the rich selling it to them?
More dis-investment? Like maybe to the Chinese, who will then own more of the country and rent it to the rest of us for money we pull out of our economy to pay them? Will they finance start-ups here to replace the ones our rich can't? Or do we just all lose more?
In other news i read today that the trade deficit increased last month, which does not bode well for a rate increase which will make the dollar and exports more expensive
1
Yes, the US labor participation rate is still 4% lower than it was in 2007/2008.
That is partly due to the policy of the administration not to help industry to keep workers on the job.
Germany did that, with government money being sent to industry, to augment salaries of workers on "Kurzarbeit" (short work). The aim was to keep the workers on the job, to be ready and up to date, when the economy would rebound.
It worked. The labor participation rate, now, in 2015, in Germany is about 2% higher now than in 2007/08.
But the idea to hand money to private (!) industry is a non-starter in the US.
Banks are another matter.
That is partly due to the policy of the administration not to help industry to keep workers on the job.
Germany did that, with government money being sent to industry, to augment salaries of workers on "Kurzarbeit" (short work). The aim was to keep the workers on the job, to be ready and up to date, when the economy would rebound.
It worked. The labor participation rate, now, in 2015, in Germany is about 2% higher now than in 2007/08.
But the idea to hand money to private (!) industry is a non-starter in the US.
Banks are another matter.
Fed Reserve is making the biblical error of putting the new sour "wine" of U.S. macro econometrics into the old "wine skins" of historical relationships and frameworks. The domestic economy has been impacted by a perfect storm of exogenous shocks and demographic shifts.
The economic model in which productivity gains were equitably divided between capital and labor decoupled in the late 70's. The job market was redirected from high input wage labor manufacturing to mid to low wage services and business capital investment was disproportionately reallocated increasingly from entrepreneurial to ponzi finance. Tax policy was changed to favor capital assets / legal entity formation and disadvantaged skilled labor. Returns were increasingly concentrated at the very top echelon.
Millions of boomers were forced into involuntary early retirement and wages have not risen sufficiently to attract it back into the economy. We are living on the considerable productivity gains of the 1990s but health care costs are rising precipitously as boomers age. Soon prolonged stagnate wages and employment will drag the domestic economy toward an extended deflationary cycle.
The economic model in which productivity gains were equitably divided between capital and labor decoupled in the late 70's. The job market was redirected from high input wage labor manufacturing to mid to low wage services and business capital investment was disproportionately reallocated increasingly from entrepreneurial to ponzi finance. Tax policy was changed to favor capital assets / legal entity formation and disadvantaged skilled labor. Returns were increasingly concentrated at the very top echelon.
Millions of boomers were forced into involuntary early retirement and wages have not risen sufficiently to attract it back into the economy. We are living on the considerable productivity gains of the 1990s but health care costs are rising precipitously as boomers age. Soon prolonged stagnate wages and employment will drag the domestic economy toward an extended deflationary cycle.
1
Historically, the 1950's-1970's the percentage of population in the workforce was between 55%-58% and we had tremendous growth in those periods. Our workforce is down, but was the increase from the mid 80's - '07, demographic, social, sustainable or even desireable? The increase in the workforce may have been one of the reasons that caused wage decline. But on the other hand companies were extremely profitable. I don't think anyone can say.
2
What are these new jobs paying? And is their consumption data correlating with this? My guess is their isn't given the other weakness the fef has their eye on.
5
Blips and various upticks here and there are nothing but fodder for the policy and Economy wonks. They dont show real hard-core change, as the variables in the various equations are outmoded and much of the data is as stale.
The US economy is in a serious doldrums. And no amount of new hires in retail and service sectors jobs are going to re-boot it to any sort of a respectable level. The good old recent-days are gone! The days when a fair amount of the population benefits from even slight up-ticks are gone!
Why? Debt! And more of it for the things that most families would have normally paid in cash/savings in the past. Like, their local taxes, and similar must-pay expenses. Which are sucking more and more families drier. Be they single home-owners, or the 2.5 children couples, or the older living off their limited retirement income households. (whose medical bills keep going up!) We're being bled dry by property, school, etc taxes (with little ROI!) and the ever increasing cost of living and consuming the bare minimums. Food prices keep going up. Basic clothes. Medical costs. Repair costs for cars keep going up. You name it and its up - and quickly! But wages? 0.2% (so for $15/hr wage = $18/wk. You cant buy cheap jeans on sale for that!)
Where is the decrease in prices that efficient production was supposed to deliver? Where is the payoff? Savings accts, offering less then 1% interest? With fees costing more then a years earned interest. !?!?!
The US economy is in a serious doldrums. And no amount of new hires in retail and service sectors jobs are going to re-boot it to any sort of a respectable level. The good old recent-days are gone! The days when a fair amount of the population benefits from even slight up-ticks are gone!
Why? Debt! And more of it for the things that most families would have normally paid in cash/savings in the past. Like, their local taxes, and similar must-pay expenses. Which are sucking more and more families drier. Be they single home-owners, or the 2.5 children couples, or the older living off their limited retirement income households. (whose medical bills keep going up!) We're being bled dry by property, school, etc taxes (with little ROI!) and the ever increasing cost of living and consuming the bare minimums. Food prices keep going up. Basic clothes. Medical costs. Repair costs for cars keep going up. You name it and its up - and quickly! But wages? 0.2% (so for $15/hr wage = $18/wk. You cant buy cheap jeans on sale for that!)
Where is the decrease in prices that efficient production was supposed to deliver? Where is the payoff? Savings accts, offering less then 1% interest? With fees costing more then a years earned interest. !?!?!
8
The recovery won't be complete until interest rates return to historical norms. Only payment of interest at rates more than sufficient to cover default risks gets people with idle money to lend it to other people who will spend it.
4
This story, like every one I've seen on this subject, is incomplete. It notes the sharp drop in the percentage of Americans who are working, from 2007 to 2010, and the modest increase since 2010. But it doesn't separate out those who have retired from those who would like to return to work.
The oldest Baby Boomers were 61 years old in 2007, and could be expected to start retiring in substantial and growing numbers, naturally decreasing the percentage of working Americans. Obviously many people lost their jobs in the Great Recession who would like to return to work, but many Baby Boomers must have retired by now as well.
Given that the total drop in the percentage of working Americans is about four percent, it seems to me that a pretty good portion of that might be accounted for by retiring Boomers.
politicsbyeccehomo.wordpress.com
The oldest Baby Boomers were 61 years old in 2007, and could be expected to start retiring in substantial and growing numbers, naturally decreasing the percentage of working Americans. Obviously many people lost their jobs in the Great Recession who would like to return to work, but many Baby Boomers must have retired by now as well.
Given that the total drop in the percentage of working Americans is about four percent, it seems to me that a pretty good portion of that might be accounted for by retiring Boomers.
politicsbyeccehomo.wordpress.com
3
Would this be offset by new people coming into the workforce?
No, we haven't and we won't be able to. I'm referring to those of us born after 1955. We didn't get any of the benefits that the earlier groups received when it came to employment opportunities, promotions, pensions, etc. We came of age when pensions were ended, 401Ks were substituted, jobs started to dry up and wages didn't keep pace with the actual cost of living. We were excessed, not hired, and treated by everyone like we were garbage because we were born at the wrong time. People were tired of the baby boom generation. What no one seems to understand is that there were two generations in there: the early, lucky group and the rest of us. The rest of us didn't fare as well. In fact, anyone born after 1955, unless they went into finance, had a rich family, or made it big, will have lots of fun when it comes to retirement, keeping a decent job, paying their student loans, paying for health insurance premiums, housing, health care, etc.
Ain't Republican American a wonderful place to live?
Ain't Republican American a wonderful place to live?
8
Only partly. There are swarms of Baby Boomers, which is why it was called the "baby boom."
3
Why are any of us even discussing the rigged, unrealistic unemployment report? For YEARS, we've all known this is not a reflection of the real unemployment picture. Look around your neighborhoods, your local grocery, the waiting room of your doctor's office. Talk to these folks. I know that they are all as frightened of the future as I am. At 56, I know that when my job ends, so ends my working/paid life. Same for my husband. These reports and statistics are meaningless in the real world populated by most of us. I know what I see. The economy is great if you are a CEO, or already a multi-millionaire ( and not the government definition of wealthy, which is garbage). If you don't meet either of those standards, the economy blows.
33
Not to throw a damp towel over your head, Neil, but despite the glowing numbers that you were given, remember this:
• average wage growth fell 2.3% YoY and those NOT in the labor force grew to 94.4 million
• the U6 unemployment rate rose to 9.9% (never reported) while the U3 unemployment rate remained flat at 5%
• the number of folks employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 319,000 to 6.1 million in November
• 25,495,000 foreign-born workers in the U.S. had a job, up 375,000 from October’s previous record of 25,120,000
• workforce participation rate has remained about the same or slightly worse than that of 1976 - around 94 million out of work americans
• normally, the Fed raises interest rates when the underlying economy is strong and inflation (monetary growth) needs to be cooled off - this is not the case today
• the Fed has inflated the biggest credit bubble in financial history, hence, liquidity cannot be slowed and rates CANNOT be raised without affecting the colossal mountain of credit derivatives and derivatives debt
Remember: The Great Recession ended in June 2009, yet average wage growth and real median household income has remained depressed compared to 2007.
And since January, the US has added 293,900 waiter & bartender positions and zero manufacturing workers.
That's the almost possibly could be wanna be robust economy for you.
• average wage growth fell 2.3% YoY and those NOT in the labor force grew to 94.4 million
• the U6 unemployment rate rose to 9.9% (never reported) while the U3 unemployment rate remained flat at 5%
• the number of folks employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 319,000 to 6.1 million in November
• 25,495,000 foreign-born workers in the U.S. had a job, up 375,000 from October’s previous record of 25,120,000
• workforce participation rate has remained about the same or slightly worse than that of 1976 - around 94 million out of work americans
• normally, the Fed raises interest rates when the underlying economy is strong and inflation (monetary growth) needs to be cooled off - this is not the case today
• the Fed has inflated the biggest credit bubble in financial history, hence, liquidity cannot be slowed and rates CANNOT be raised without affecting the colossal mountain of credit derivatives and derivatives debt
Remember: The Great Recession ended in June 2009, yet average wage growth and real median household income has remained depressed compared to 2007.
And since January, the US has added 293,900 waiter & bartender positions and zero manufacturing workers.
That's the almost possibly could be wanna be robust economy for you.
24
He does end the article with this: "But in terms of the day-to-day experience of American workers and potential workers, the new numbers point to how much repair there is left to take place."
2
Your statistics are mostly ridiculous and all misleading.
Average wage growth and the broadest measure of income growth - the Employment Cost Index - are both up year over year by 2.5%.
U6 has fallen from a peak of 17% in 2009. 10% is a normal rate of U6 unemployment and it is reported every month by the US Bureau of Labor Statistics.
The number of people employed part time for economic reasons peaked in 2009 at 9 million. That number is down by 3 million since 2009 and down 765,000 year over year.
There are official government sources for data, but I'm sure you don't believe them in favor of right wing blogs, wild-eyed emails and Fox news.
Average wage growth and the broadest measure of income growth - the Employment Cost Index - are both up year over year by 2.5%.
U6 has fallen from a peak of 17% in 2009. 10% is a normal rate of U6 unemployment and it is reported every month by the US Bureau of Labor Statistics.
The number of people employed part time for economic reasons peaked in 2009 at 9 million. That number is down by 3 million since 2009 and down 765,000 year over year.
There are official government sources for data, but I'm sure you don't believe them in favor of right wing blogs, wild-eyed emails and Fox news.
1
Yes, the right wing, wild-eyed, Fox News spouting…Bureau of Labor Statistics. Thanks for clarifying that…
Neil, why do you use the less relevant employment to population ratio instead of the more relevant prime age employmemt to population ratio which improved this month but was still not a ratio that is consistent with where it was proor to the recession? I agree with your points but I also think you should present the more relevant data even when it doesn't prove your point as much as the less relevant data.
3
Not sure why everyone is complaining about the labor force participation part. Did you look at the chart? Am I supposed to believe that as the economy was going to hell in hand basket all the sudden 4% of the working age population decided they didn't want a job?
3
it could be that employers did not want them (i.e., too old, wrong skills, not willing to move, etc.)
2
The statement “Consider one of the great weaknesses of the economy the last few years: the millions of people who left the labor force entirely during the last recession and have not returned, many of them of prime working age.” does not capture the long-term effect of the experience and knowledge that also left the innovative field of science and engineering along with the affected practitioners.
In near future, one might see a little bit of tweaking of an existing product here and there, but the emergence of next generation of life-changing technologies, medicines and similar products will suffer for a long time. Thus, the emergence of the recent pharmaceutical company like Valeant is not an isolated event, but an alternative to greedy-capitalism practiced in absence of real research and innovation.
In near future, one might see a little bit of tweaking of an existing product here and there, but the emergence of next generation of life-changing technologies, medicines and similar products will suffer for a long time. Thus, the emergence of the recent pharmaceutical company like Valeant is not an isolated event, but an alternative to greedy-capitalism practiced in absence of real research and innovation.
2
Maybe then the focus wont be wholly on the stock market and quarterly numbers if rates go up?
3
It is a mistake to raise the interest rates now. With Dollar getting stronger, exports will drop. Imports will increase. The low paying jobs in retail sector will increase but drop in high paying jobs in manufacturing sector. Overall consumer power drops. With two thirds of the economy is consumer driven, it is hard to imagine an economic growth that could cause inflation. With interest rates increasing, the number of people who could be qualified for home mortgage drops. Worldwide economy is cooling and we don't live in isolation. I don't know what numbers Federal Reserve looking at, they are looking at the wrong numbers. The chairman of the Federal Reserve and all members of the committee belong to old economy making decisions for the new economy. Doesn't bold well.
6
Why in the graphic is it labeled a ratio, when the number (59.3) is actually a percentage? The two are related but not the same.
3
What's the difference? A factor of 100?
1
I feel the arrogance of Fed that they think themselves as mighty economy fixer under the congressional impediment by Republican's economic policy of austerity. Without touching the expanded Fed's balance sheet, quarter % point increase of rate may not mean much to the real economy as financial market except stock market and also currency market have already adjusted already.
However, as current as well as hysteresis impacts of the austerity continue in our economic growth, I still wonder if Fed is going to make a right decision.
However, as current as well as hysteresis impacts of the austerity continue in our economic growth, I still wonder if Fed is going to make a right decision.
Very illustrative of the so-called improving jobs situation in this country is the photograph chosen for this article ~ a guy wearing his Walmart vest, standing on a ladder stocking shelves. Wonder how many other minimum wage jobs this man is juggling in order to make ends meet?
Despite rosy-sounding statistics and manipulated numbers, millions of people in this country are living in poverty or near-poverty - even those with jobs (or multiple jobs), millions of others are not even counted in the official employment numbers.
It all comes down to corporate ownership of this country, as well as its "leaders" in government - both Democratic and Republican. The economy of this country is not for the greater good - it's designed and implemented so that a very small cadre of people are allowed (encouraged) to make an obscene amount of money on the backs of the citizens.
The pronouncements of the government have very little to do with reality. Reality is where people have given up, where people are slaving away for minimum wage and stressed and deeply in debt in one way or another. In the real world that actual human beings live in (at least the majority of them)- the recession never went away. Things did not get better. And no one is on their side. It's all a lie...it's all a game of numbers. All the elite thinkers and the government officials and economists can all cheer the great stats - but the people know what the truth.
Despite rosy-sounding statistics and manipulated numbers, millions of people in this country are living in poverty or near-poverty - even those with jobs (or multiple jobs), millions of others are not even counted in the official employment numbers.
It all comes down to corporate ownership of this country, as well as its "leaders" in government - both Democratic and Republican. The economy of this country is not for the greater good - it's designed and implemented so that a very small cadre of people are allowed (encouraged) to make an obscene amount of money on the backs of the citizens.
The pronouncements of the government have very little to do with reality. Reality is where people have given up, where people are slaving away for minimum wage and stressed and deeply in debt in one way or another. In the real world that actual human beings live in (at least the majority of them)- the recession never went away. Things did not get better. And no one is on their side. It's all a lie...it's all a game of numbers. All the elite thinkers and the government officials and economists can all cheer the great stats - but the people know what the truth.
21
Which economy is growing? Who is doing well? If you ask the employees who live from paycheck to paycheck most are not doing well. That has been the story for over 30 years, ever since Reagan was in office, ever since trickle down economics was pushed as the next big thing. If you ask almost any person who has lost a job for any reason, even if they have found another, they are not doing well because the new job probably doesn't pay as well as the old job. If they are over the age of 35, have more than 10 years experience, are in the IT field or any other field where employers can outsource or hire contractors, they may not have been able to find a new job.
Retraining is not the answer. The answer is to stop using contractors and hire the people, give them benefits, and pay them a decent wage. The answer is for our government to stop allowing jobs to be shipped overseas on the lame excuse that this country is lacking in people in the STEM fields. What a poor excuse! There are more than enough skilled people in the sciences that most companies don't need to hire on visas. The problem is that companies don't want to pay for experience, talent, and skill.
If our politicians and employers want skilled people they have to pay us decent salaries and give us some job security. Without that we won't spend, plan for the future, or be able to keep our families and ourselves in one piece. Of course that's exactly what is wanted: desperate people.
Retraining is not the answer. The answer is to stop using contractors and hire the people, give them benefits, and pay them a decent wage. The answer is for our government to stop allowing jobs to be shipped overseas on the lame excuse that this country is lacking in people in the STEM fields. What a poor excuse! There are more than enough skilled people in the sciences that most companies don't need to hire on visas. The problem is that companies don't want to pay for experience, talent, and skill.
If our politicians and employers want skilled people they have to pay us decent salaries and give us some job security. Without that we won't spend, plan for the future, or be able to keep our families and ourselves in one piece. Of course that's exactly what is wanted: desperate people.
51
Bravo!
You agree with Stephanie Kelton, Bernie's economic advisor, that the federal government should guarantee a decent federal job to all those who need one or paid training for such a job. They could fix roads and bridges, help teach small classes, etc.. This would allow the government to eliminate most present forms of welfare.
I agree also.
I agree also.
13
Thank you for mentioning job security--which is rarely mentioned even in editorials that are sympathetic to the plight of workers. (Most articles will discuss wages, but not the consistency of these wages).
This might be one of the most unexplored aspects of late-capitalism: the inability of people to plan for the future due to intentionally precarious employment (which business people love to call 'flexibility'). As Immanuel Wallerstein has said, you can plan for long term unpredictability (from decade to decade or generation to generation), but you simply cannot plan for short term unpredictability (year to year or month to month). I posit that a society without a clear direction forward for its citizens is no society at all. It is, instead, a machine for grinding up resources.
We should seize the machine.
This might be one of the most unexplored aspects of late-capitalism: the inability of people to plan for the future due to intentionally precarious employment (which business people love to call 'flexibility'). As Immanuel Wallerstein has said, you can plan for long term unpredictability (from decade to decade or generation to generation), but you simply cannot plan for short term unpredictability (year to year or month to month). I posit that a society without a clear direction forward for its citizens is no society at all. It is, instead, a machine for grinding up resources.
We should seize the machine.
2
Perhaps the Fed is so preoccupied with the financial sector that it has not noticed the current recession in the commodity sectors. Extractive, agricultural and related support industries face significant deflation and over capacity. Many in these sectors are over leveraged with now underutilized investments made when prices were high. These conditions alone cap any general inflation. If the Fed raises rates it will be 'because it can'. The results are likely to be many bankruptcies and consolidations.
6
The numbers show the economy is heading toward its ideal condition for the investor class. It's producing ample growth and wealth for them, while the persistent surplus of unemployable discarded workers is helping corporate executives reduce loss and spoilage-- i.e., shareholder value diverted to labor salaries and benefits.
In other words, income inequality continues to increase at a healthy pace. The economy is performing well!
In other words, income inequality continues to increase at a healthy pace. The economy is performing well!
32
And everything will come to a crashing halt if the GOP takes up anymore space
12
Pls...if the Fed gonna take Nov unemployment number, it's ridiculous. Because you got seasonal job increase from October to December.
2
The BLS report lists both unadjusted and seasonally adjusted numbers. The unadjusted figures indeed show a big jump due to seasonal hiring (more than 1.5 million more jobs from September to November). The adjusted number (509 thousand) is much smaller and is the figure quoted in most news reports.
But it was only a month or two ago that Mr Irwin was wringing his hands over the state of the economy!
I'll take the kind of steady, unexciting growth we've had over the past several years any day over the boom-and-bust cycles that cause so much pain.
I'll take the kind of steady, unexciting growth we've had over the past several years any day over the boom-and-bust cycles that cause so much pain.
3
The good news is not for everyone. Millions of Americans over age 55 cannot find jobs. None of the Presidential candidates – several of whom are over 65 – appears willing to address the issue of (rampant) age discrimination in the workplace.
Last week, a good friend of mine with many contacts in my professional field, took a high-level recruiter to lunch, specifically to discuss my job search and hand her my resume. I am a legal professional with three Ivy League degrees, 25 years of experience and excellent references. I’ve been out of f/t work since I was laid off last year.
The recruiter refused to meet me, telling my friend that, at my age – over 60-- placing me would be impossible. She suggested that I work on my own. Although I’m doing that, it takes years to build a business, my family and I need my income - now.
On the advice of my local congressional rep, I visited the NYS employment office, where I ended up instructing other applicants my age, as well as the NYS official who ran the orientation session, re age discrimination law. The NYS official told me that she was over 60 and feared losing her job. In other words, rather than being assisted in my job search, I was tapped for free legal advice by others in my predicament, including the NYS employee whose job was to help me.
I feel as though I have been condemned for a crime that I did not commit. I want everyone to work. I am healthy, educated and skilled. Why can’t I have a job?
Last week, a good friend of mine with many contacts in my professional field, took a high-level recruiter to lunch, specifically to discuss my job search and hand her my resume. I am a legal professional with three Ivy League degrees, 25 years of experience and excellent references. I’ve been out of f/t work since I was laid off last year.
The recruiter refused to meet me, telling my friend that, at my age – over 60-- placing me would be impossible. She suggested that I work on my own. Although I’m doing that, it takes years to build a business, my family and I need my income - now.
On the advice of my local congressional rep, I visited the NYS employment office, where I ended up instructing other applicants my age, as well as the NYS official who ran the orientation session, re age discrimination law. The NYS official told me that she was over 60 and feared losing her job. In other words, rather than being assisted in my job search, I was tapped for free legal advice by others in my predicament, including the NYS employee whose job was to help me.
I feel as though I have been condemned for a crime that I did not commit. I want everyone to work. I am healthy, educated and skilled. Why can’t I have a job?
63
We're in a similar boat. My wife is over 60 and since losing her job three years ago, she has been unable to find a f/t job. Every time I read an article about the improving economy, I feel like I'm reading about a different country.
30
Same, similar here. I live in the overheated bubble called the San Francisco area and it is boomtimes here at the moment. Well, if you are under the age of 45. If you are over 45, opportunities are slim. To none. And if you want work, there is the assumption that you will, of course, possibly find it if you are an independent contractor. Maybe. However, becoming and being an independent contractor is NOT a solution to the problem. It take particular skills and personal abilities and motivations to go all out and sell yourself over and over and over again on a per-project basis. And even if you would bit the bullet and decide that this is what you must do, it takes time and training for most people to go there and do it. Most of us over the age of 50 don't have that "time." Also, I read just last night that most Millennials also aren't sold on the "gig" economy as the place they want to or must be. They want jobs with paychecks and long-term missions, too. So much for the "everyone will be an entrepreneur" stuff coming out of the mouths of the few who do have those skills and desires abilities.
25
Same here. I'm working right now but I know that if this job or this company doesn't work out, I'm finished. I'm 57, working in a start up (which is great), have had to change careers once, and I know from past experience with being unemployed that each time you lose a job, no matter what the reason is, finding the next one is harder. You may have more skills but you're also older.
American employers, for the most part, want dirt cheap labor and they will do anything to get it ranging from classifying jobs that require experience as entry level, firing experienced employees, outsourcing to whatever foreign company is cheapest, importing cheap labor (include hiring illegal immigrants in that), or telling qualified older employees that they are worthless and leaving them in the dirt. We have a great economy if you're rich, don't need to work, or happen to be a CEO. Otherwise, you are nothing, nobody, and undeserving. Just ask our elected officials and employers.
American employers, for the most part, want dirt cheap labor and they will do anything to get it ranging from classifying jobs that require experience as entry level, firing experienced employees, outsourcing to whatever foreign company is cheapest, importing cheap labor (include hiring illegal immigrants in that), or telling qualified older employees that they are worthless and leaving them in the dirt. We have a great economy if you're rich, don't need to work, or happen to be a CEO. Otherwise, you are nothing, nobody, and undeserving. Just ask our elected officials and employers.
29
The economy has added 13.5 million jobs over the last 68 months, the longest record of job creation in history.
Jobless claims are at the lowest level in over 40 years.
Available jobs, as measured in the Jobless Openings and Labor Turnover Survey (JOLTS) stands at 5.5 million, the highest level ever recorded.
The 5% rate of unemployment is lower than Ronald Reagan ever achieved during his 8 years in office (5.4%).
The labor participation rate peaked in the late 1990s and has been declining since. It reflects demographics, primarily retiring Baby Boomers.
We should be thankful in this country for the great progress made in averting the 2008-09 Crisis. In the EU unemployment has barely fallen from a peak of 11.5% over the past 6 years.
The strength of the US dollar reflects the relative performance of our domestic economy to the rest of the world.
Jobless claims are at the lowest level in over 40 years.
Available jobs, as measured in the Jobless Openings and Labor Turnover Survey (JOLTS) stands at 5.5 million, the highest level ever recorded.
The 5% rate of unemployment is lower than Ronald Reagan ever achieved during his 8 years in office (5.4%).
The labor participation rate peaked in the late 1990s and has been declining since. It reflects demographics, primarily retiring Baby Boomers.
We should be thankful in this country for the great progress made in averting the 2008-09 Crisis. In the EU unemployment has barely fallen from a peak of 11.5% over the past 6 years.
The strength of the US dollar reflects the relative performance of our domestic economy to the rest of the world.
13
Once again, I think that Neil Irwin misses the most salient issue regarding the Fed's overwhelming desire to raise interest rates.
The Fed has a dual mandate, employment and inflation. That mandate requires the Fed to stimulate the economy by lowering interest rates to spur hiring, but conversely increases in employment figures does not require the Fed to raise rates. Rather, the Fed has to gauge the non-accelerating inflationary rate of unemployment (NAIRU). Here, the second prong of the Fed's mandate requires the interest rate be raised to head off inflation. However, broad measures of inflation continue to show that the rate of inflation is below the Fed's 2 percent target, which arguably is too low a target. Given that, unemployment is still likely above NAIRU.
Janet Yellen states her fear is spiraling inflation that would require the Fed to raise rates quickly, which in her view might cause a recession. Yet, she blithely appears to have not fear that raising rates in the absence of inflationary pressures could likewise cause a recession. Given the asymmetric risks facing the Fed, the desire to raise rates based solely on positive employment numbers is perverse.
It's beyond the time that commentators, like Mr. Irwin, start addressing that point.
The Fed has a dual mandate, employment and inflation. That mandate requires the Fed to stimulate the economy by lowering interest rates to spur hiring, but conversely increases in employment figures does not require the Fed to raise rates. Rather, the Fed has to gauge the non-accelerating inflationary rate of unemployment (NAIRU). Here, the second prong of the Fed's mandate requires the interest rate be raised to head off inflation. However, broad measures of inflation continue to show that the rate of inflation is below the Fed's 2 percent target, which arguably is too low a target. Given that, unemployment is still likely above NAIRU.
Janet Yellen states her fear is spiraling inflation that would require the Fed to raise rates quickly, which in her view might cause a recession. Yet, she blithely appears to have not fear that raising rates in the absence of inflationary pressures could likewise cause a recession. Given the asymmetric risks facing the Fed, the desire to raise rates based solely on positive employment numbers is perverse.
It's beyond the time that commentators, like Mr. Irwin, start addressing that point.
17
The Fed has pumped the money supply so much that it has mortgaged future growth to prop up the economy. They absolutely must increase rates and get ahead of the inevitable inflation. Given the weakness of the economy in the rest of the world and the glut of money that wants to flow to the US, the risk of a slowdown is minimal.
1
Mtnman - There's this little equation:
P = (MV)/S
where P is prices , M is the amount of money in the economy, V measures the frequency that money changes hands usefully, and S is the dollar amount of the amount of stuff, goods and services, we can produce in some time period.
A word on V. If the government gives Scrooge McDuck a Billion for advice on the comic book market, M increases by a Billion, but if Scrooge puts the bucks in his basement, and forgets about it, that doesn't affect P at all. That Billion has a V of 0. Also, if Scrooge lose a bet to Daddy Warbucks, and the Billion moves from Scrooge's basement to Daddy's, that is a change, but the V does not change because it is not a useful change. It doesn't affect commerce.
Inflationistas like Mtnman cannot understand an equation with more than 2 variables. To them it looks like:
P = M.
You print more money, you debase the currency, prices go up. End of story. Of course this might happen if S and V remain constant, but in point of fact, the causes of most, if not all excessive inflations since WWI has been S getting too small--shortages, The anchovy harvest failed in 1972. There was a shortage of livestock feed. Then came the oil embargo. Prices rose.
With QE, M goes up, but the new money sits in the coffers of banks or chases itself in financial bets. It has a very low V. P rises only a little.
Rocket science it ain't.
P = (MV)/S
where P is prices , M is the amount of money in the economy, V measures the frequency that money changes hands usefully, and S is the dollar amount of the amount of stuff, goods and services, we can produce in some time period.
A word on V. If the government gives Scrooge McDuck a Billion for advice on the comic book market, M increases by a Billion, but if Scrooge puts the bucks in his basement, and forgets about it, that doesn't affect P at all. That Billion has a V of 0. Also, if Scrooge lose a bet to Daddy Warbucks, and the Billion moves from Scrooge's basement to Daddy's, that is a change, but the V does not change because it is not a useful change. It doesn't affect commerce.
Inflationistas like Mtnman cannot understand an equation with more than 2 variables. To them it looks like:
P = M.
You print more money, you debase the currency, prices go up. End of story. Of course this might happen if S and V remain constant, but in point of fact, the causes of most, if not all excessive inflations since WWI has been S getting too small--shortages, The anchovy harvest failed in 1972. There was a shortage of livestock feed. Then came the oil embargo. Prices rose.
With QE, M goes up, but the new money sits in the coffers of banks or chases itself in financial bets. It has a very low V. P rises only a little.
Rocket science it ain't.
23
No, it most certainly ISN'T rocket science - it's macroeconomics, the farthest thing from science. In fact, it's the pseudoscience that relies on simple linear equations like you so blithely submit here that are completely divorced from reality.
3
In order to get growth, you need to have a lot of young, vigorous workers who are forming households and starting families.
Our demographics are not that bad; there are a large number of young people between 20 and 30. But many of them are held back by college debt and poor education. If they manage to get around these problems, they could propel the economy.
I don't believe that all the people who are 'not in the workforce' are economically inactive. Even if they don't have official jobs, the ones in the 23-54 age range are almost certain doing something. They may be working in the informal economy, or they may raising families and doing work around the house.
Our demographics are not that bad; there are a large number of young people between 20 and 30. But many of them are held back by college debt and poor education. If they manage to get around these problems, they could propel the economy.
I don't believe that all the people who are 'not in the workforce' are economically inactive. Even if they don't have official jobs, the ones in the 23-54 age range are almost certain doing something. They may be working in the informal economy, or they may raising families and doing work around the house.
3
With the ease of moving money around in small doses electronically via apps, I would agree that it is likely that the informal economy has grown significantly.
2
Where are the jobs that will provide salaries high enough to maintain a household for these "young, vigorous workers"?
5
Improvement in wages needs to happen, but with U1 at 5% and U6 falling from 17% to 10% most recently, the number of jobs is healing nicely.
What also needs to happen is to get away from the lock-step thinking that the sociopaths on wall street are pushing that growth needs to exceed 5% for everything to be "good". I'd love to see 3%, to tamp down these overheating cycles being pushed by the wingnuts with access to the money as they pathologically search for the next soft spot to exploit.
I'm particularly gratified that the US public continues to pay down debt and is saving more. This too will act to tamp down the lunatic behavior being pushed by wall street.
What also needs to happen is to get away from the lock-step thinking that the sociopaths on wall street are pushing that growth needs to exceed 5% for everything to be "good". I'd love to see 3%, to tamp down these overheating cycles being pushed by the wingnuts with access to the money as they pathologically search for the next soft spot to exploit.
I'm particularly gratified that the US public continues to pay down debt and is saving more. This too will act to tamp down the lunatic behavior being pushed by wall street.
1
Mtnman seems unable to distinguish between public, federal, debt and private debt. The are opposed forces. The federal deficit is income for people, businesses, and state & local governments.
Federal debt is, of course, not being paid down. And that's a good thing. Here is my usual bit of history:
The federal government has balanced the budget, eliminated deficits for more than three years in just six periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, and 1920-30. The debt was paid down 29%. 100%, 59%, 27%, 57%, and 36% respectively. A depression began in 1819, 1837, 1857, 1873, 1893 and 1929.
Federal debt is, of course, not being paid down. And that's a good thing. Here is my usual bit of history:
The federal government has balanced the budget, eliminated deficits for more than three years in just six periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, and 1920-30. The debt was paid down 29%. 100%, 59%, 27%, 57%, and 36% respectively. A depression began in 1819, 1837, 1857, 1873, 1893 and 1929.
4
" The percentage of the population working was unchanged at 59.3, which is only a tenth of a percentage point higher than it was a year earlier."
As our population ages, we can't expect the past labor-participation percentages to continue, no?
As our population ages, we can't expect the past labor-participation percentages to continue, no?
7
No. Agreed. However, retiring Boomers alone do not explain away the low Labor Force Participation Rate that has hung on and on and on. There are plenty of people still at all age points -- even just below the official "retirement age" -- who can't find work.
2
Lots of things going on that are influencing workforce participation. There's about 3.5 million retiring every year or about 2.5% of the workforce, much higher than the number of young people entering the workforce.
The cash economy is growing because of incentives to avoid reportable income (taxes, child support, health care, undocumenred workers, etc).
Slow growth is not a bad thing, it is keeping inflation in check (except in the predatory pharmaceutical world). We are already at full employment levels in most large cities.
The cash economy is growing because of incentives to avoid reportable income (taxes, child support, health care, undocumenred workers, etc).
Slow growth is not a bad thing, it is keeping inflation in check (except in the predatory pharmaceutical world). We are already at full employment levels in most large cities.
3
I think that readers should compare Look Ahead's post to RCT's, further up in the comments list. RCT is an underemployed legal professional who is over 60 and has been told that he or she is unlikely to get a comparable full-time job back. Employment, growth, and inflation are locked in a complex tradeoff even in a well-managed economy. Look Ahead sees no problem with slow growth. I'll bet he or she is fully employed, or at least has a comfortable retirement account. RCT would love to see the job market pick up smartly, and is probably less worried about inflation.
2
I agree with most everything stated in the column. However, I would dig deeper into the conditions for working people. Youth unemployment is over 15%. African American unemployment is over 9% and with the pending rate hike, will remain high, and could go up.
The point of a rate hike is to slow down either an over heated economy, which no one I know thinks is our current situation, and/or to reduce inflation, which shows no signs in the data. So exactly why is the Fed raising rates?
Chair Yellen was correct in speaking about what the Fed could do to address inequality in our economy, even taking lots of criticism from the GOP on Capitol Hill. So, why would she think it is a good time to raise rates right now and lock 9% African American unemployment and further wage stagnation for most workers? I don't see a justification for raising rates. The Fed should maintain rates low until we begin to see a tightening of the labor markets. It is the only prudent thing to do.
The point of a rate hike is to slow down either an over heated economy, which no one I know thinks is our current situation, and/or to reduce inflation, which shows no signs in the data. So exactly why is the Fed raising rates?
Chair Yellen was correct in speaking about what the Fed could do to address inequality in our economy, even taking lots of criticism from the GOP on Capitol Hill. So, why would she think it is a good time to raise rates right now and lock 9% African American unemployment and further wage stagnation for most workers? I don't see a justification for raising rates. The Fed should maintain rates low until we begin to see a tightening of the labor markets. It is the only prudent thing to do.
9
Well, it's only "prudent" for the Fed to do so because they have an unlimited supply of money. If I, as a fiduciary, were to lend at zero or near zero, I would be sued by the regulating state's attorney general in a heartbeat. I know that as a fact, because the corporate trustee that is co-trustee has told me that it would instigate that action.
Everyone knows interest rates don't belong at zero, and almost everyone but the Fed has been acting accordingly. It's tough to move the needle when everyone is leaning the other way.
Everyone knows interest rates don't belong at zero, and almost everyone but the Fed has been acting accordingly. It's tough to move the needle when everyone is leaning the other way.
1
Once labor markets start to tighten, it's too late to put the brakes on inflation with the tools that the Fed has to offer. The black unemployment rate is falling in parallel with the white, so I don't see your "lock in" point.
Andy, as you stated in for first sentence, what "everybody knows" does not apply to the FED.
1
For so long as you are going to discuss labor force participation rates without the context of age-adjustment, you are doing the conversation about the economy a disservice. It is an actuarial fact that the Baby Boomers are gradually shifting out of the work force. Labor force participation rates will continue to fall, and unless the Fed or someone else has access to the Fountain of Youth, there will be no reversing that trend for the foreseeable future.
4
I looked at this, too. My question was how much of the cliff illustrated in the chart relates to baby boomers retiring during the financial crisis?
To find that out, I looked at the Workforce Participation Rate from 1950-2015. That rate is the percentage of people currently working who are 16 years and older. And if you look at that chart, you will find that in the 1950s through about 1965, the participation rate was actually in the 50s. And then from that point through 2005, the rate climbed to the mid 60s and then began to fall, which it continues to do.
For sure, there are many who left the workforce and haven't returned yet. but there are a fair number of people who planned for this and simply retired.
To find that out, I looked at the Workforce Participation Rate from 1950-2015. That rate is the percentage of people currently working who are 16 years and older. And if you look at that chart, you will find that in the 1950s through about 1965, the participation rate was actually in the 50s. And then from that point through 2005, the rate climbed to the mid 60s and then began to fall, which it continues to do.
For sure, there are many who left the workforce and haven't returned yet. but there are a fair number of people who planned for this and simply retired.
2
Yes but going back to the 50's one would also have to consider that there were very few 2 earner households and very few people on any government assistance. The mere fact that the federal reserve has not raised interest rates for so long shows the real story of the US economy and job market.
2
The unemployment-population ratio data goes back to 1948, it would be instructive to show it. It becomes pretty clear that the long term trends in this number are not strictly a function of economic cycles.
The unemployment-population ratio is higher than it was from 1948-1977, not usually considered a bad period for employment.
There are 2 effects keeping this ratio at these levels:
- Demographics
- Fewer families with two working parents
The unemployment-population ratio is higher than it was from 1948-1977, not usually considered a bad period for employment.
There are 2 effects keeping this ratio at these levels:
- Demographics
- Fewer families with two working parents
9
Here's the graph for anyone interested.
http://data.bls.gov/pdq/SurveyOutputServlet
I'm not sure a follow what you mean by demographics. That could mean a lot of things. I definitely agree on the second point though. Women entering the workforce had a huge impact on the employment-to-population metric.
However, I think the author was trying to make a different point. Our labor participation is currently a full 4 percentage points below pre-recession levels without any major changes to labor demographics. We haven't experienced a second right-to-work movement in the past decade.
Participation plummeted from 2007-2010 (recession to through) and never came back. Meaning you have a lot of people that used to work but now seem to have given up permanently. Worse: if the labor market effectively shrank by 4 percentage points, we've seen a corresponding growth in labor productivity but no corresponding growth in wages.
There's definitely a lot wrong in our economy that the jobs report overlooks.
http://data.bls.gov/pdq/SurveyOutputServlet
I'm not sure a follow what you mean by demographics. That could mean a lot of things. I definitely agree on the second point though. Women entering the workforce had a huge impact on the employment-to-population metric.
However, I think the author was trying to make a different point. Our labor participation is currently a full 4 percentage points below pre-recession levels without any major changes to labor demographics. We haven't experienced a second right-to-work movement in the past decade.
Participation plummeted from 2007-2010 (recession to through) and never came back. Meaning you have a lot of people that used to work but now seem to have given up permanently. Worse: if the labor market effectively shrank by 4 percentage points, we've seen a corresponding growth in labor productivity but no corresponding growth in wages.
There's definitely a lot wrong in our economy that the jobs report overlooks.
14
A lot of people simply retired early during the great recession. They won't be back, and they were part of the outsized demo of the boomers.
1
How about thinking about why women entered the workforce. From 1946 - 1973, wages rose in lockstep with productivity. The rate of return on labor rose with the rate of return on capital. Starting in 1973 and increasing in 1981, these curves diverged, Wages did not keep up with productivity and the rate of return on capital rose faster that that of labor.
Where did the money go?
Well, the Gini index was 0.25 in post WWII; it is about 0.50 today. CEO's them took 20 - 50 times what their average worker got; it is 300 - 500 times today.
The money went to the Rich. Therefore, in order to buy food, clothing, housing, etc. the wives of workers had to join the workforce.
Where did the money go?
Well, the Gini index was 0.25 in post WWII; it is about 0.50 today. CEO's them took 20 - 50 times what their average worker got; it is 300 - 500 times today.
The money went to the Rich. Therefore, in order to buy food, clothing, housing, etc. the wives of workers had to join the workforce.
8