1) there's not just one unemployment rate
2) the CI of those rates might make your head spin.
Now, comes reporting that the Atlanta Fed is proposing a new measure of unemploymentthat they're calling ZPOP. In essence: percent of prime age working population who want jobs, with jobs.
The first question which crossed my mind, naturally, when reading the reporting: is the Atlanta Fed Red or Blue?, mostly right or mostly wrong? The regional Feds aren't unbiased, non-partisan think tanks, much as most would have you believe. Here's the list of the Fed banks. Lockhart is president of Atlanta. Here's the WSJ rankings of accuracy. Click the labor tab, and Lockhart floats to second. Not bad.
In any case, the notion of focusing on "prime age" unemployment as the standard bearer makes perfect sense. Note, as has been recently mentioned, that labor force participation decline is not from geezers going out to pasture. It's from the genWhatevers living in Mom's basement because they can't get any kind of job. We can't afford it.
Upon further chewing, I've got to discuss something in the CBS News piece. The author is an academic economist (self-describes as econometrician). Here's the quote
One final note about this and other measures of resource utilization. Full employment is defined as more than full utilization of resources. Just because a worker is employed doesn't mean he or she is doing what they're best at or employed in their most productive occupation. If an unemployed engineer takes a job waiting tables to feed the family, that worker will be defined as fully employed, but that worker's potential is hardly fully utilized.
This point of view tends to be Left Wing; Right Wingnuts would rather that anyone but them live at subsistence: more of the economic pie for themselves, of course. But there's also a real world issue, which is that, over the last few decades, the more education one has the more likely you're employed in the non-productive sectors of finance or health or government. The problem with GDP is that its measurement is fungible. Not too long ago the BEA changed the playing field:
On July 31 , the U.S. Bureau of Economic Analysis will rewrite history on a grand scale by restating the size and composition of the gross domestic product, all the way back to the first year it was recorded, 1929. The biggest change will be the reclassification--nay, the elevation--of research and development. R&D will no longer be treated as a mere expense, like the electricity bill or food for the company cafeteria. It will be categorized on the government's books as an investment, akin to constructing a factory or digging a mine. In another victory for intellectual property, original works of art such as films, music, and books will be treated for the first time as long-lived assets.
The net effect of this, of course, is to further incentivize folks into non-production employment. Not that Joey's going to read the GDP detail before declaring his college major, but the policy wonks (Left and Right) will and are certain to favor such sectors. Gramm-Leach-Bliley came about just for that reason: "we're good at finance, so let's do more!!" Let the Chinese make the stuff. The richest country on the planet in all of human history, but we don't actually make any of the widgets we buy. This makes sense? As the Bloomberg piece says,
Robert Atkinson, president of the Information Technology & Innovation Foundation think tank, criticizes "intangible-capital fundamentalists" who, he says, unreasonably dismiss the contribution to growth of investment in tangible high-tech equipment.
The point, of course, is to reward the non-producing sectors. You know, like financial services which happily "innovated" us into the Great Recession. We really, really need more folks in finance and cartoons.