04 November 2013

Pretty Boy Floyd

Floyd Norris' column this Saturday was unusual, in that there was no cite to the QWERTY Analytics (or some such), just his byline, NYT, and BLS data. Let's see.

Start with the title:
Changes in Labor Force Mask Gains in the Jobs Situation

With such a title, one would rationally expect that he's going to present data which contradicts both the Left Wing and Right Wing Nuts, who point to the continuing drop in the size of the labour force as the main reason the stated unemployment rate has fallen. The lack of progress by Obambi is something both camps agree on. They disagree as to why, of course. The Left asserts that the Tea Party House (and the Senate, but less egregiously) eviscerated the stimulus effort; they got to spike the recovery and shift the blame to Obambi. The Right disclaims any responsibility for watering down the stimulus, claiming it wouldn't work at any amount of money; the key is to get all those welfare cheats back to work at starvation wages, and then all will be well.

The record is clear: the Right did spike the stimulus. What might have happened with either a more focused stimulus, or none at all can't be known now. We do have much historical data to demonstrate that robust stimulus works. It's called World War II. It would be helpful to get the stimulus effect without all the dead bodies and razed cities, of course.

So, he continues:
But the actual employment picture 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 accompanying charts attempt to adjust for those changes. They do not show a strong recovery, but they do indicate that the overall employment situation has improved.

One might reasonably infer from this that, despite a drop in the size of the measured labour force (usually referenced as the Labour Force Participation Rate, rather the count), unemployment has really gone down, i.e. employment has really gone up. Let's see.

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 more people at or over traditional retirement age, it should be no surprise that fewer are working.

While I don't have a cite immediately to hand, data since The Great Recession began have measured an *increase* of older workers working past the "average" retirement age of the years previously. In other words, to the extent that older workers make up the demographic, there is data indicating that they've not gone off to the Life of Riley Hammock, sipping gin. And if we look at the linked graphs, we see that old folks continued to work. If you examine the middle cohort, in middle dense blue, you can see that the unemployment rate and participation rate track exactly in The Great Recession period, lending credence to both the Left and Right that things ain't all that much better.

In sum: the oldest cohort has stuck to the labour force in greater numbers than in the past, from which those with rose colored glasses conclude that the unemployment situation is getting better, overall. For those not so festooned, the middle cohort has, even with Norris' "adjusted" numbers taken it the gut. The youngest cohort, worse still.

As I read the data, the oldest cohort retains due to coercion, not choice. Their positive effect on overall employment status isn't really a positive: they can't afford to retire and leave their jobs to younger folks. This is not progress. Note that the Right Wing Nuts constantly bray about forcing the old farts to work until 70 or 75; after all in 1935, 65 was the average life expectancy so we should obviously raise today's retirement age to average life expectancy. Makes sense to me.

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