c.2013 New York Times News Service
c.2013 New York Times News Service
The unemployment rate has fallen by nearly three percentage points since the Great Recession was at its worst four years ago. But another indicator of the labor market has shown no improvement at all.
That is the labor force participation rate the percentage of working-age Americans who are either working or looking for jobs. The latest report showed it at a 35-year low.
That rate has been cited by some politicians, who argue that the economy remains in the doldrums. The fall in the unemployment rate, said a release by Republican members of the Joint Economic Committee this summer, is largely a mirage, driven by declining labor force participation.
The actual employment picture, however, may be better than those statistics would indicate. Over the last few years, the labor force has changed in important ways because of demographics.
The statistics do not show a strong recovery by any means, but they do indicate that the overall employment situation has improved.
The labor force and employment-to-population statistics treat everyone in the country over the age of 16 as part of the population that could be working, whether the person is 18, 48, or 98. But, of course, a 48-year-old is more likely to be working than a 68-year-old, regardless of the economy.
The makeup of the working age population has changed substantially in only a few years. When the recession began at the end of 2007, 54 percent of the people considered to be working age were in the prime working age range of 25 to 54. Now, the figure is 51 percent. The proportion over 55 went to 34 percent, from 30 percent. With an ever greater number of people at or over traditional retirement age, it should be no surprise that fewer are working.
To adjust for that, I calculated the proportion of men and women in various age groups who were working or were in the labor force during past years, and assumed that the population then was similar in demographic characteristics to the current population. Thus, any changes reflect changes in the economy, not demographic changes.
The result is a much more rapid rise in the proportion of people with jobs than is apparent in the unadjusted statistics. The labor force participation rate is still lower than it was in recent years, but it is higher than it was in the 1990s, when the economy was recovering from the recession that began early in that decade.
The labor force participation ratio for people over 55 rose throughout the downturn, while that for people in their prime working years fell, although not as rapidly as for younger people ages 16 to 24.
One thing that stands out is that the adjusted employment-to-population ratio rose in 2006 to a level that was higher than it had ever been, at least going back to 1948. That was higher than in 2000, the previous peak, and well above the level reached in 1989, which in the unadjusted figures appeared to be comparable.
Had that been well understood at the time, it might have been clearer that the economy was overheating in the mid-2000s, and perhaps the Federal Reserve would have been more willing to take steps to limit the financial excesses that culminated in the financial crisis.
What has happened since then reflects the need by some older people to work longer, and the inability of some younger ones to find jobs at all. Men between 25 and 34, the period when careers begin and families form, are less likely to have jobs now than at any time from 1948, when the statistic began to be compiled, to 2009. But that figure has improved to 82 percent since hitting a low of 79 percent in 2010. At the low point in the early 1980s recession, the number did not go below 83 percent.
More than one in four women ages 65 to 69 was employed in September. Twenty years earlier, fewer than one woman in four in that age group had a job. More than a third of men in that age group were employed, up from about a quarter two decades earlier.