Jobless Decline Masks Drop in U.S. Labor Force

[xchrom]

http://www.bloomberg.com/news/2012-02-08/jobless-decline-masks-drop-in-u-s-labor-force-as-fewer-seek-work-economy.html

The unemployment rate’s unexpected drop to a three-year low has overshadowed a less-positive labor- market development: fewer Americans are looking for work.

Last week’s Labor Department announcement that the jobless rate fell to 8.3 percent in January sent stocks and bond yields higher. The same report showed the share of working-age people in the labor force had declined to the lowest level in 29 years.

The so-called participation rate was cited by Federal Reserve Chairman Ben S. Bernanke yesterday to support his assessment that the rate of unemployment obscures vulnerabilities in the job market. Bernanke, speaking to the Senate Budget Committee, confirmed the Fed’s stance that interest rates will stay low at least through late 2014, and repeated his view that the job market is a “long way” from returning to normal.

“Weakness in the labor force is frustrating to the Fed, which needs to see broadened participation from labor in this recovery,” said Eric Green, chief market economist at TD Securities Inc. in New York. “What the Fed wants is the real stuff. They want unemployment falling with the labor force rising.”

[LiberalEsto]

1. I'm one of those who has given up looking for work

I'm sure there are lots of others like me.
Nobody wants to hire a 60-year-old woman, and in 2 years I'll be eligible for early Social Security. We can just about get by on my husband's salary for now.

[Yo_Mama]

4. The worst of it is

That even with so many out of the workforce, in December there were still about 4 people looking for work for every job opening. (3.78 to be exact).

If the job market ever did improve to 3 to 1 ratios, a whole lot more people would get back in and the official unemployment rate would rise.

One of the things that almost makes me want to vomit is looking at articles that ignore the real problem with long term unemployment. Many of these people badly want a job and have applied for hundreds of jobs. They are the less-favored. The old, the fat, the gimpy, those with some type of disability - no employer will hire them when they have so many more eligible candidates who look "cheaper" and just more publicly acceptable over the long term.

Until we come to grips with what has really happened to the economy, we will not get out of the hole we're in.

[lumberjack_jeff]

2. “needs to see broadened participation from labor in this recovery"

The stats are unsurprising.

... But this quote caught my eye. “Weakness in the labor force is frustrating to the Fed, which needs to see broadened participation from labor in this recovery,”

They are less worried about the number of people out of work than they are about "the labor force" shrinking. They don't care if you're working or not, but they do care that you're out there competing for the few jobs available so that the employers can keep wages low.

[woo me with science]

7. Good catch. nt

[cthulu2016]

3. three factors

1) fewer jobs, of course. On balance a bad thing.

2) aging population -- a little month after month participation drop-off is currently baked in the cake

3) fewer two-income households. I suspect this is as much a wage issue as a raw jobs issue, because the two go hand in hand. If two people can survive on a low level with one salary then the two-salary couple becomes a weighed decision, versus a forced decision. For instance, when you subtract child care from a minimum wage job is it worth it, if not absolutely needed for survival? The second income is thus more sensitive to trade-offs and things like rate of pay and benfits. In general people will not work unless there is a persuasive reason to do so, given the entirety of the circumstances.

re: The participation rate in general. It is in no way obvious to me that higher participation is desirable in and of itself. It is arguably as much and indicator of financial distress as of prosperity. The participation rate increased steadily from 1960-2000 due to greater female participation in the workforce. This was a good thing in equality terms, but of course exerted some downward pressure on wages. Since 2000 it flatlined then rolled off when the economy crashed. Since we know that particular drop is due to fewer jobs and economic misery it is a bad thing but under other circumstances it could be a very good thing. For instance, if we magically doubled all wages the participation rate would plummet as people became able to opt for under-employed leisure without enduring extreme poverty.

[ProgressiveEconomist]

5. Good analysis, especially the part

about boomer retirements. 10,000 people a day are turning 65 and no longer need to continue to work to have relatively good health insurance.

A FOURTH factor related to your second factor: The vast majority of the 10,000 boomers retiring every day are employed at some of the highest salaries they ever earned, because of their seniority. To the extent employers choose re-filling those positions over workforce attrition, boomer retirements make jobs available for cheaper, younger workers. This is a brand new factor in employment dynamics.

I think the Bloomberg article cited in the OP ignores this important new factor.

One way to tell whether I'm right is to disaggregate declines in labor force participation by age and gender. I'd suspect that, for example, any declines in labor force participation among males 35-55 would be minor compared to declines in the proportion of the male labor force that is 65 and older.

[lumberjack_jeff]

8. Here's most of what you're asking for

I just got this from the bls website.

I'd suspect that, for example, any declines in labor force participation among males 35-55 would be minor compared to declines in the proportion of the male labor force that is 65 and older.

Decline in labor force participation by males over 20 is long-term and chronic. Demographic changes can't account for the drastic drop, and in any event the same demographic factors should be at work in the population of women too.

A year or so ago, equal numbers of women and men worked outside the home, because of that you might think that the lines in the above chart should cross, the reason they don't is because there are a lot more women over 20 than there are men.

[ProgressiveEconomist]

10. Thanks, but doesn't 'males 20 and over'

mix in males 65 and over?

I think the BLS website has what I'm looking for only in individual issues of its 'Employment and Earnings' publication. Maybe one of the Federal Reserve Bank websites has the level of detail I'm looking for already extracted and cleaned.

[lumberjack_jeff]

11. Are those over 65 a much larger percentage of males over 20 than in the past?

Probably somewhat more, but not enough to account for the difference.

[hfojvt]

6. who decides that that is a "less positive development"?

Personally I am kinda counting down the days until I can leave the focking labor market. 5 more years until retirement. Five more years until retirement.

&feature=related