Dan Foster thinks the White House is playing fast and loose with employment numbers:
"White House Rapid Response Director" doesn't mention labor participation rate and historic lows. Easy to have lower unemployment when nobody is looking for work. https://t.co/eoyFizRUi6 https://t.co/9C0m8VquBv
— Foster (@foster_type) January 7, 2022
This just isn't true. The labor force participation rate has been declining for decades, for reasons that still aren't entirely understood. But it has nothing to do with the pandemic or Biden or anything else currently going on.
It's easy to see this. If you draw a trendline from 2000 through 2019—thus eliminating the pandemic years—and then extend it through 2021, you'll see that we're right on trend. If you take a look just at prime-age workers, which is a better gauge of the labor market, you get this:
There's no hocus-pocus here, no smoke and mirrors. The participation rate for prime-age men is slightly above trend and the rate for prime-age women is more than a percentage point above trend. In other words, it's at historically normal levels. People who want work are looking for it and getting jobs. That's why both the headline unemployment rate and the broader U6 measure of unemployment are both very, very low right now.
We can do better. Maybe someday we'll figure out how to turn around the historic trend of lower participation in the workforce. For now, though, the employment picture looks pretty good. It just does.
It's possible that automation means we just need less "labor". I don't know if that's been lowering the participation rate, but I think it's something that humans will have to deal with.
It's a big part of the shrinking of the manufacturing sector, to be sure. Some of those jobs were outsourced to China or SE Asia, but a lot more over the past 20-30 years were simply lost to automation. You see that continuing in the fast food sector today -- most McDonalds I walk into these days have a bunch of computerized ordering kiosks (as well as apps) and like one employee at the registers. There are still people in the back assembling orders and things, but I'm sure the company is working on a robot for that as well.
Right. Also, how do we know it's a bad thing if the labor participation rate goes down? One consequence of increasing automation might be that more people could spend more time out of the labor force, perhaps doing better things with that time.
+1
Automation, which has been going on for about 250 years, has always meant loss of jobs in some sectors. But jobs have arisen in other sectors and total employment has not declined. Is the unemployment rate much higher now than it was in 1770? The result has been more stuff, not fewer jobs. In addition work hours decreased for a long time (but not much since 1940) without decreasing yearly wages. Humans have been dealing with this for that 250 years. Robots, that is artificial intelligence, may take some white-collar jobs instead of the losses being in farming (most people were farmers in the 19th century) and blue-collar jobs. But if the economy is conducted on fair lines new jobs will arise as they always have. Real wages basically quit rising about 1970 for reasons not connected to automation, primarily the use of much cheaper foreign labor but other government policies as well.
It is really remarkable how supposedly well-informed people ignore this very basic economic history and implicitly assume that output will remain constant, that is that there will be no economic growth.
Actually the total labor participation rate increased a great deal through the second half of the 20th century and then leveled off around 2000 This was because of increased participation by women. One reason women were able to enter the workforce is that automation reduced the amount of time that had to be spend on household work. Meanwhile the participation rate for mean steadily decreased. None of the caused a trend in unemployment.
rate for men steadily declined
Wages stopped growing in 1970s when union jobs started to decline.
Lots of people made a lot of money over recent years from increasing asset values, especially real estate and shares. I'm frequently surprised to see couples retiring when they're only in their 50s, but they've invested sensibly over their working lives.
But wouldn't that increase the unemployment rate, not decrease the labor force participation rate? Just because a robot takes my job doesn't mean I suddenly don't need money.
It would be nice to see a summary of various plausible explanations for why the trendline has been down for a while, including some sort of discussion of whether it is related in some way to widening income inequality over the same period.
I should add at the end, "if true."
Income inequality is a lie as well. Debt is debt. Liquidate and watch the nominal income of the wealthy collapse.
The work week gradually shortened up until the 1940s, then froze at 40 hours FT; and hours worked per year hasn’t decreased either. Many advanced countries have shorter work weeks and/or years.
If we want more people to work, maybe we should make work more compatible with other demands of life. Many part-time jobs have instead placed more demands on workers - short notice on work schedules, early send-homes when work slows, making planning one’s other responsibilities more difficult.
Sorry but since I joined the workforce in the 80s the standard work week shrunk from 40 hours to 37.5. Lunch time used to be on top of the 40 hours and now it is pretty universally included in the 40 hours.
Uhh, where is that?
Link to your survey of employers, please?
Why do we want to stop the trend toward lower workforce participation? Is that the point of globalization / automation / networks / AI etc.? Seems like it's working as intended.
+1
Lol, what??? Is that retard that dumb? LFPR was lower in the post war boom, even for men. The obsession with lfpr is disturbing.
The recession is over. The boom is not happening. That was true in 2019 as well.
Kevin, you ought to know that when Democrats are in office, Republicans talk constantly about the REAL unemployment rate, which is five or six times the official rate. The latter only becomes newsworthy under Republican presidents, provided it's low or declining.
BTW have you noticed how pundits have stopped talking much about the unemployment rate, which the former guy used to brag about almost daily? Now, monthly employment figures are assessed against "economists' expectations". Of course the latter are almost invariably wildly incorrect, but reporters don't take the obvious step of ignoring them. No, if economists expected a certain number and Biden failed to deliver, well then it's another blow to Jimmy Carter's failing second term.
Oh I meant to add: naturally if new jobs exceed economists' expectations, that is reported as an increase in the crippling labor shortages which are dogging poor old Joe's terrible failed presidency.
This morning, NPR noted the low new jobs number and elaborated it on it for awhile, then noted that for the last several months, the initial numbers were lower than they should have been and corrections were later issued.
...After everyone has gone into panic mode, Republicans have gotten rich on campaign donations to defeat Joe Biden, and ... wait for it! The Dems are in Disarray!! Again!
It's hard to develop meaningful theories on consistently bad data.
200k net new jobs with 140k upward revisions is not a low number. It is a great number.
"we'll figure out how to turn around the historic trend of lower participation in the workforce"
https://www.hamiltonproject.org/papers/who_is_out_of_the_labor_force
Seems like we have a fairly good idea as to why participation is lower, which suggests policies to increase participation.
* A small part of the issue seems to be just an artifact of how we count. There's a bit of increase in people in the informal work force and in students.
* People with lower education tend to have lower levels of participation, so making college more accessible might encourage more people to look for work.
* And some people retire early and many are unpaid care givers, and raising wages might well motivate these people to join the labor force.
I’ve been continuously employed for 1988. What’s the problem? Losers. 😂
Since 1988. Loser. 😂
Looks like things are on the up and up, and Biden is rightly pointing out that obstructionist Republicans deserve none of the credit. All they've got left right now is inflation, which is likely short-term and exaggerated, so won't be an issue come mid-terms. Still months to go between now and then, just gotta keep pushing, and pull the country out of this COVID tailspin, vaccinations are working and people need to understand not to obsess about infections/antibodies, the primary motivation for (and standard for approval of) vaccines was preventing serious illness, hospitalization and death.
Who knows what the future has in store for more hybrid work arrangement? I've been pushing for years in my circles that there's a lot of innovation we can do with mixed work (office and remote), 4-day work weeks, etc. And for many tech companies with globalized work forces, the whole notion that we only deploy and/or provide support for our products and services between 8-5pm doesn't even really make any sense anymore. There is definitely more room for both innovation and productivity gains, while employing ever more people and promoting better work/life balance.
When I was working at EMC, they had 24x7 support options available world wide and 3 customer and service support centers spaced with overlaps and with processes and communications to transfer case support to follow the sun until the case was resolved. And the core of that was in place in 1995 when I joined. It just got bigger over time.
I am surprised that kevin is making the point that trump was just the bestus most awesome president ever, at least on the metric of getting the labor participation rate high.
Because, using Kevin's supposed trendline , the labor participation rate stayed pretty close to that trendline for most of the period with the obvious exception of going well above trendline during the trump years before the pandemic. So obviously trump's policies must have been hugely awesomely world class to produce such an unexpectedly better than expected trendline result.
Unless of course Kevin's " trendline " is a ridiculous expectation of what the labor force participation rate " should be" .
There are so many adjustments that need to be made to try to really estimate the " expected " labor force participation rate. For one, the strength of the economy makes a big difference. The labor force participation rate is higher when the economy is growing and jobs are easy to find. Starting the trendline from 2000 when economy at peak but just about to tip into recession will make the decline bigger. And many other factors like change in relative age groups in population makes a difference.
But I think Kevin is missing one big thing here in seeming to want to argue that the labor force participation rate is near " normal " and thus the unemployment rate is OK.
The labor force participation rate should NOT be at the pre pandemic trendline anyway. Because we are still in the pandemic. The pandemic is still distorting the labor force in many ways , some of which we do not fully understand.
It should not be expected that Biden would have restored the labor force participation rate to what it would be without the pandemic until AFTER the pandemic. And trying to construct trendlines bases on pre pandemic trends to see if we are doing OK is nonsensical until the pandemic is reasonably past .
"The labor force participation rate has been declining for decades, for reasons that still aren't entirely understood. " It's called the retirement of baby boomers, and recently the entry of the baby bust echo into the work force. (Long term it also includes gender equity making being a house husband more acceptable.)
Notice that the chart is labeled “Prime working age adults”; most workers age out well before retirement. Secondly, the measure is “Labor Force Participation Rate“, so the size of cohorts does not matter, since both numerator and denominator reflect it.
One factor is, tax changes have made it easier not to work.
Labor income is taxed 7.65% from dollar one (OASDHI, and that's just the employee portion) and then you pretty quickly get into normal income tax rates scaling up to 22% for the middle class.
Meanwhile, you can get $40,000 in dividend and capital gain income tax free, and that's on top of the same exemption/deduction that everyone gets. And then the next $400,000 of dividend and capital gain income is taxed at the egregious rate of ... (checks notes) ... 15%.
Why has labor participation declined?
It's just too expensive to work!