Unemployment Rate Down Due To Participation Rate Decline

Unemployment Rate Down Due To Participation Rate Decline(istockanalyst.com)

25 points by billswift 13 years ago | 12 comments

lkrubner 13 years ago |

Just a reminder to everyone: the decline of male participation in the economy is a long term trend that started at least in the 1950s:

http://www.bls.gov/opub/ted/2007/jan/wk2/art03.htm

As the Bureau Of Labor puts it:

"The labor force participation rate of men has been decreasing since the 1950s, having registered 86.4 percent in 1950, 79.7 percent in 1970, 76.4 percent in 1990, and 73.3 percent in 2005. This decline has resulted from various factors. For example, the Social Security Act was amended in 1960 to make individuals under 50 years of age eligible for disability payments."

I have never heard a comprehensive reason for the 60 year decline. It is possible that there is no one reason for the 60 years of decline. Each decade there are obvious reasons for the decline during that decade. For instance, the mechanization of agriculture during the 1950s and 1960s caused many jobs to be lost, especially among African Americans, and many of the people who lost their jobs were never able to find new ones (it can be tough to find a new career if you are 40 years old and have little education).

The loss of the textile industry added more to the decline.

I have not heard a theory about the long-term nature of the decline. Possibly the demographic shift after 1964 (the end of BabyBoom in the English speaking countries) add up to one generation losing their jobs mid-life and the next generation simply being smaller than the previous one? I am not sure. I've never seen that argument made.

Of course, for context, all of this is set off against the dramatic rise in the participation of women in the economy, a trend that peaked for most female demographics in 2000.

Since 2000 there has been a general decline in nearly all demographics.

The USA used to be unusual (for most of the century before 2000) in that it put a very high percentage of its adults to work (relative to Europe). However, since 2000, Europeans nations have seen an uptick in labor participation and the USA has seen a downtick, so the USA rate of participation in the economy is now closer to the norm for developed countries.

Here are the World Bank numbers for men and women in all countries:

http://data.worldbank.org/indicator/SL.TLF.CACT.MA.ZS

http://data.worldbank.org/indicator/SL.TLF.CACT.FE.ZS

(These numbers are interesting but I am curious if the same definition of "work" is used in all countries. In the female rankings, the USA is at 58% whereas Uganda is at 76%. I do not believe there are any nations on Earth where 76% of the females engage in the monetary economy. I'm guessing then that some non-monetary work is being counted in Uganda, but not in the USA.)

nandemo 13 years ago | |

The technical term for the baby boom thing is demographic window.

http://en.wikipedia.org/wiki/Demographic_window

E.g., Brazil is in the demographic window now, and labour participation has recently peaked. Most Western European countries are past that window, as is the US. If they have an uptick in labour participation, I'd guess it's due to immigration.

Another factor is simply the country's economic development stage. In poor countries, lots of people are working on subsistence or otherwise low-tech agriculture so they cannot retire early.

Not clear why you think 76% for female labour participation is infeasible. They have to work.

Some speculation: as for men's rate decline, I'd guess it's mostly due to women's rate being on the rise (in the long run)? Men have to work less if their wives are working. And in the US, you'd probably want to look at the incarceration rates too.

lkrubner 13 years ago | | |

"Not clear why you think 76% for female labour participation is infeasible. They have to work."

How is this coherent? If they have to work then why isn't the rate 100%? If you agree that 24% are not working, then you admit that there might be forces at work that could keep 20% or 30% or 40% or 50% from not working. The sentence "They have to work" could only be justified if the participation rate was 100%

joshsegall 13 years ago |

Although, unexpectedly this is not due to a growth in the number of discouraged workers. It's not clear where they went. See http://www.motherjones.com/kevin-drum/2012/09/why-did-labor-...

billswift 13 years ago | |

If you count the long-term unemployed, the number of discouraged workers has grown. U6, which only counts those who are discouraged and have been unemployed less than a year, hasn't risen, but other unofficial counts that include those unemployed for more than a year has.

In fact, by some unofficial counts, like this one http://www.opednews.com/articles/Real-Unemployment-at-23--by... , total unemployment may be as high as 23% right now. Nor is this the only one, this sight is pretty lefty, two recent essays on the conservative site VDare.com have given similar estimates (22%) for current total unemployment.

GFKjunior 13 years ago | | |

I think that number is very reasonable. Zerohedge.com is very libertarian and they also use the 23% number provided by shadowstats.

lsc 13 years ago | |

hm. I would think that a large number of boomers are starting to retire. My parents all retired in the last few years, and one of them got an 'early retirement package' to leave slightly earlier than she otherwise would have been able to.

runawaybottle 13 years ago |

"Discouraged workers"

http://www.youtube.com/watch?v=_ogxZxu6cjM

FD3SA 13 years ago |

Some further reading for the curious [1][2]. It is becoming increasingly apparent that the structural unemployment issue is indeed due to rapidly advancing automation technologies.

Note that the current 58% labour force participation rate is startlingly low when compared to the past two decades.

1. http://econfuture.wordpress.com/2012/08/20/china-robotsautom...

2. http://raceagainstthemachine.com/2012/01/05/the-rebound-that...