Tag Archive for unemployment

Is the Labor Force Shrinking Due to Boomer Retirement? (Not Mostly)

Every month when the BLS releases the employment report, I dig into the data and tweet about it at length using the hashtag #BLSFriday. (Follow me on Twitter to catch this incredibly exciting data dive. The next one is on June 1st.)

If you’ve been following the job numbers closely, you’ll know that this recession we’ve seen a particularly sharp drop in labor force participation. Labor force participation measures how many people either have a job or are looking for a job as a percentage of the population. As of March 2012 labor force participation has dropped to 63.6%, the lowest point since December 1981.

Because the unemployment rate doesn’t measure people who aren’t in the Labor Force, many (especially conservatives) have noted that the unemployment rate is “artificially” low and that many have left the labor force, basically giving up even looking for a job.

One Twitter friend, @rizzuhjj, pointed out that the Chicago Fed has a paper that claims that half of the post-1999 decline in the labor force is due to long-term demographic trends, specifically, Baby Boomers aging.

Here is a chart of the labor force participation rate since it the last time it was this low. You can see that we’re at the point where Boomers are starting to retire, so surely that would be driving the massive drop in labor force participation and not due to the recession, right?

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To test this, I decided to sift through the employment data by age, as provided by the BLS. In January 2008, the participation rate by age looked like this (click to enlarge).

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(The outline is a rough approximation of where Baby Boomers land in the data. Which is OK because the Baby Boomers are an approximate age group anyway.)

You can see that the boomers are largely entering the age ranges where participation in the labor force drops off significantly. So, on the surface, this explanation makes sense.

This was my test: Take the participation rates for post-Baby Boomers (16-49 year old) and multiply them for the corresponding populations for those ages. That way we’ve isolated just the post-Baby Boomer labor force and can see if it is smaller now than it was 3 years ago. This is what I found.

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Or, to make it a little clearer, this is the change in labor force participation by age since January 2008.

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Apply the January 2008 participation rates to current population and this means we are missing 3.4 million post-Baby Boom workers from the labor force. These post-Boomers account for 68% of the “missing” work force.

If labor force participation was dropping only due to Baby Boomer retirement, the rate should have dropped from 66.2% in January 2008 to 64.8% today. Instead, it is 63.6%. There is certainly a good deal of room for improvement to get younger people back into the labor force. We shouldn’t simply push the problem off to being Boomer retirement or we risk ignoring a whole generation that is unemployed and flying under the radar.

What Happens to Unemployment Tomorrow?

Just thought I’d post this. I’ve always been a little fascinated by the number of people needed to pull off something as huge as a the census. And next month we should see the peak of the census employment burst. Observe:

This was done in about 20 minutes, so it might need some explanation.

Basically, I start with with the June before the census and mark that number (somewhat arbitrarily) as my base federal employment point. Then I checked the employment numbers moving forward from that point as a percentage of that number.

As you can see, if this census year follows the path of the last census year (which it seems to be doing so far) the May employment number coming out tomorrow should add around 300-350 thousand jobs due to the census alone.

How big is a 300-350 thousand job increase? Well, the increase in employment as a whole between March and April was about 250 thousand. So, if the recovery continues as it has been, we should see an increase of something along the lines of 500-600 thousand jobs tomorrow.

Take note, I’m doing really simple guesswork here. I’m pretty sure that geoff over at Innocent Bystanders will have more intelligent things to say on the matter tomorrow.

Visualizing Unemployment By State

I worked on this for a talk on visualization that I gave last week and I thought it was something that would be enjoyed here.

This is basically just a visualization of unemployment by state since we started collecting the data. With the play button, you can watch the whole thing from 1976 to 2009 in about a minute or you can drag along the timeline to a specific month. The size of the circle indicates the number of people unemployed in a given state and the color of the circle indicates the rate of unemployment in the state. Move you mouse over one of the circles to see the raw data.


Get Microsoft Silverlight

If you’re interested in looking at this project in more detail, I talk about it at my professional site, Designer Silverlight.

You can copy the code to embed this with the text below:

My Dance Of Humility Before Robert Stacy McCain

Back at the beginning of September, Robert Stacy McCain stated that:

The FHA is on the hook for lots of “underwater” loans, taken out by low-income homeowners who got special low down-payment deals and — in case you didn’t notice — unemployment hit a 26-year high in August, with no prospect the 9.7% jobless rate will go down any time this year.

At the time, I wrote a post stating:

If unemployment dips below 9.7% by the end of the year, I will make a point that your enormous confidence in the suckiness of the economy was misplaced.

If it does not, I will write a humble post begging your forgiveness. I’m curious to see how this goes.

Therefore, I take note that Stacy McCain predicted the trajectory of the economy more accurately than I would have. I humbly beg his forgiveness.

I would like to take a moment, though, and explain why I wrote that post in the first place.

I am fascinated by neurology… particularly how the brain forms memories and how those memories interact with reality. The evidence that pretty much everyone has false memories (where we can vividly remember things that didn’t happen) is overwhelming. What I’ve found in the last 10 years of following politics is that this area is particularly vulnerable to people saying things about the past that they totally believe are true but are, in fact, based on a narrative that was established after the fact.

People look back in hindsight and say “Well, of course John Kerry was a terrible candidate.” But they’re only saying that because he lost. If he had won, the narrative would have been established that he was the right guy at the right time who ran a campaign of brilliance with these subtle nuances that connected with the people. We have this certain sense of fate through which we look as if the world we live in was one of inevitability and we realign our perspectives and (frighteningly) our memories to align with reality as it turned out.

That’s why I love the internet and blogs in general. I love to take the feeling understanding of a certain time and place and write it in stone. Looking back at September now, it seems obvious that we weren’t out of the woods at the time. But it didn’t seem obvious to me or to a large chunk of those writing about the economy.

That the unemployment situation was still on the downturn seemed obvious to Stacy McCain and at the time I was struck by how different our expectations were. Some people will look back at his post and say “Well, of course the unemployment rate wasn’t going to decrease. Everyone knew that.” This post is to point out that not everyone knew that and that it wasn’t an obvious thing. We shouldn’t discount those who are right about something because the narrative has made their very gutsy prediction seem obvious.

It’s worth keeping record of our reactions at the time and comparing them to how the world turned out. It’s worth pointing out when someone is able to make an accurate prediction. And Stacy McCain had me on this one.