Paul Krugman makes a claim in his column (appearing in today’s New York Times) that is both wrong and misleading.
The column features his familiar theme that ordinary Americans are suffering terribly as a result of the decrepit shape of America’s current, GOP-ransacked economy. Krugman’s offending statement is the one in bold:
Our [that is, ordinary Americans'] bleakness partly reflects the fact that most Americans are doing
considerably worse than the usual economic measures let on. The
official unemployment rate may be relatively low — but the percentage
of prime-working-age Americans without jobs, which isn’t the same
thing, is historically high. [emphasis added]
Sounds ominous. But what does this figure mean? The closest statistic that I can identify to "percentage of prime-working-age Americans without jobs" is to start with (one minus) the labor-force-participation rate of Americans aged 25-54. Then adjust that figure for the unemployment rate of Americans in that age group.
For example, if 90 percent of Americans between the ages of 25-54 are participating in the labor force (that is, either have or are seeking employment), then ten percent of Americans in this age-group are without jobs by choice (some, for example, are stay-at-home parents). These ten percent of Americans without jobs are not "unemployed," for they are not in the labor force.
Then, to determine the actual number of prime-working-age Americans who are "without jobs," we must add to this 10 percent of Americans, in this age group, who are without jobs because they aren’t in the labor force whatever percentage of the remaining 90 percent of Americans aged 25-54 are unemployed. BUT because there’s no reason to suppose that unemployment is hitting workers in this age group today significantly any harder or less hard (relative to workers in other age groups) than in the past — and because, by Krugman’s own admission, today’s unemployment rate of 5.1 percent isn’t especially high — we can ignore this unemployment rate for my purposes.
So what am I getting at? This: Krugman’s statement that "the percentage
of prime-working-age Americans without jobs, which isn’t the same
thing, is historically high" is, as I said above, both wrong and misleading.
Look at Figure 1B on this page from the San Francisco Fed. (HT Russ.) It does not show the labor-force-participation rate for all Americans aged 25-54; rather, it breaks down the participation rate for Americans in this age group by sex.
Look at the labor-force-participation rate of men (aged 25-54). That rate is indeed lower than in the past. For the full time period reported in this Figure, that rate is indeed at an all-time low. It peaked in 1953, and has been declining ever since.
Now look at the labor-force-participation rate of women (aged 24-54). Not surprisingly, it has surged in recent decades, although leveling off a bit since around 1990 and even declining a tiny bit since around 2000.
It’s highly unlikely that, given that today prime-working-age women participate in the labor force at rates vastly higher than was true even in, say, 1975, that the percentage of all Americans aged 25-54 who are "without jobs" is today lower than it was thirty or even twenty years ago.
Whatever is the percentage of prime-working-age Americans who are today "without jobs," it surely isn’t — contrary to Krugman’s hysterical claim — "historically high."
One possibility is that Krugman saw these, or similar, data and confused "men aged 25-54" for "all workers aged 25-54." If so, then he’s correct that the percentage of men in this age group "without jobs" is "historically high" (where "history" here is confined by the data that go back no farther than the late 1940s). But today’s "historically high" figure is part of a trend that began during the first year of the presidency of Dwight Eisenhower. At that time, George W. Bush was seven years old.
(Note also that, although the labor-force participation rate of prime-working-age men has been declining for a half century, the trend is slight. Even today’s "historically" low figure is pretty darn high.)
So, to summarize. Krugman is simply wrong to assert that the percentage of Americans of prime-working-age without jobs is "historically high" — and misleading to suggest that, whatever this percentage might be today, that it is evidence of some major economy malady. A rise in the percentage of prime-working-age persons "without jobs" might just as well reflect greater middle-class prosperity — resulting in more years of schooling or early retirement — as it reflects economic hardship (such as workers so discouraged by their futile job searches that they just call such searches to a halt).
BTW, this post from Megan McArdle on labor-force-participation is worth reading.
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{ 26 comments }
Krugman misleading or wrong? Why, that's as shocking as the sun rising in the East and setting in the West.
Fewer men "in their prime" in the work force may also be a testament to women's success in the work place. Far more men today are opting to be stay at home dads than in, say, 1960.
As far as I know (and I may be wrong), dropping out of the labour force to start your a business would count one as unemployed – at least for a period of time. since employed men are much more likely to take the risk of giving up employment to become an entrepreneur, the tiny decline of men in the work force could also be a sign of more entrepreneurship. No?
Interesting narrative.
But the odds of Krugam being wrong and you being right are pretty low.
I believe Krugman was referencing Floyd Norris and presumably this chart.
RN, why do you think so?
Krugman is a partisian hack for the democrats these days…he used to be a great economist, but now is concerned ONLY with bashing Bush.
Maybe when GW gets out of office, we can see some good things out of him again.
IF a democrat wins, you'll see his tone change in January.
marmico,
But that chart is just men. Men are only part of the workforce. It says nothing about the workforce overall – only men in the workforce.
Boudreaux nailed it: One possibility is that Krugman saw these, or similar, data and confused "men aged 25-54" for "all workers aged 25-54."
Cross-referencing Krugman's blog predating publication of the NYT oped.
Whatever we can now draw a chart with the line of worry hysteria of Krugman and the what-me-worry hysteria line of Don Boudreaux and observe the intersection. Anyone has any idea of how to interpret that intersection? Anyone knows how we could do cross-countries analysis of it? Are the intersections affected by the level of hysteria? Do we really get anywhere pursuing this type of analysis? What is the conclusion we could draw from this discussion between professors?… Yeah I thought so!
Who is not in the labor force and is actively seeking a job?
I have always distrusted polls and the gathering of statistics to support or show a position. Obviously to answer my above question people had to be queried and a response obtained. Of those questioned, who lied about actively seeking a job and who answered honestly? We have no real or good way to verify most of those answers.
I can drive through parts of Houston and point out prime age men wandering or lounging around with no visible signs of employment, but I'd hestitate to assume that they were actively seeking a job. As a matter of fact I'd bet against that.
Now, how do we define working or employment? Do we ignore those who are self employed? If not, then at what point does self employment begin to disappear from the rolls? Is the farmer, who works for no wages and never has, who gets his entire means of sustenance from his own production and use of his land and sweat of brow, unemployed? Is the mother who raises the family children and only works within the home unemployed…..those numbers are definitely growing as women realize how terribly wrong the feminazis are.
Getting back to the farmer, would the stats from 1880 show that approximately 75% of the nation's prime age work force was unemployed because they were all rural farm owners/workers?
"There are three kinds of lies; lies, damned lies, and then statistics", Benjamin Disreali British Prime Minister.
Krugman, a socialist hack, is guilty of all three.
RN seems to have engaged in the high school debating tactic of "appeal to authority" by asserting that the odds of Krugman being right are high. This, as I said however is, "so high school." Unfortunately this tactic is often used because it is often effective, because signals, in general, are often useful. At this point however, "Krugman" should be universally recognized as a signal for "bad economics."
The BLS takes some effort to measure the number of "discouraged workers." Remarkably, this number is small and has been very stable for some time. Recent numbers have it at 400,000 or so people that basically are not classified as unemployed, are not looking for jobs (because they are discouraged) but would like a job.
That post-secondary enrollment rates among "non-traditional" students (read: aged 25-54) has really expanded in the past decade or so has yet to be mentioned. Students are not counted as being in the labor force if they are not also working a job.
There is a huge literature in labor economics analyzing these trends, it does not seem that many folks have taken the time to examine it.
Vidyohs: It is my understanding that people who willingly do not work in the job market (stay at home parents, retirees, winos, etc.) are not "unemployed" but just out of the labor market. The 10% who do not want employment the article mentions. From what I remember, the term "unemployed" only looks at those who want work but can't find it.
I am always more curious about how many people stay out of work in that 5.1% vs how much is just constant churn. My guess is that 5% is churn, and .1% just can't get a job over the course of a year or so, in the same way that the people in the lowest income bracket generally are in a higher income bracket a few years down the road as they get better jobs and the like.
Hammer,
Since "want to work" is subjective and based on the response of the individual polled, I wonder how many say they want to work but make no effort to do so.
Vidyohs,
I don't know what you mean by: Is the mother who raises the family children and only works within the home unemployed…..those numbers are definitely growing as women realize how terribly wrong the feminazis are.
What do you think the feminazis are wrong about? Women are certainly not choosing to stay at home more. Take a look at the Fed graph. Female participation in the workforce is growing, not declining. To get to Krugman's assertion, you have to blow the slight reduction in male participation out of all proportion.
Methinks: Yea, I suspect the number that say "Oh, yea I am looking" is probably a bit misleading as well. Does "I am looking" mean "I am looking for a very specific sort of job, and turning down other possibilities," "I will take anything I can get that pays over X" or "I just need a pay check"? Or does it mean "I have to say 'Yes'
in case you know my parents, but really I am happy living in their basement until they die or kill me."
I personally am a little leery of most studies since how questions are asked and answers qualified can be tremendously misleading.
To put works in Vidyoh's mouth, I think he is saying feminists were very wrong about whether or not being a stay at home mom was rewarding. A big push back in the day was that women who worked in the home were little better than slaves, and would never know happiness until they got a job.
Now, I am all about people being able to support themselves in absence of other's help, but there is definitely something to be said about the fact that many women find it quite lovely to focus their time and attention on their families. I believe Vidyoh's point was that many women are rediscovering this, and likely some men as well, and are choosing to forego career focus in favor of raising their children.
There are people, though, who are not desired in the workplace and who have left government rolls as far as unemployment numbers are concerned. So you have the job churn, the picky holdouts, and everything else to contend with in order to get a good picture of what is happening. Parcing through the minutia is tough business in order to tease out the hardluck story.
But this excercize does provoke a bigger question. Why are there those pundits who look for the hardluck story when the labor numbers are the same (or even better) during one time (11/2000 to present) period over another (1/1992 to 3/1999) period — a period when no such pundit is focused on pessimism? I have my thoughts.
Because no one cares to hear "Hey, everything is going pretty well!" or "Highest standard of living for the most people ever! Again!" People just like to have excuses for why they don't have a bigger house, or a bigger car, or any number of other symptoms of prosperity, and then be told "Hey, it isn't your fault. If only X was controlled by better person Y, you would have everything you want instead of it being stolen by greedy person Z."
Humans are naturally interested in bad things happening, given that good things are pretty much the standard state of existance, and likewise good things don't take out your knees while you are not looking. The trouble is that it is easy to become so preoccupied with theories of horror that people forget just how much good is within their ability to bring about. Plus, no one likes to admit their short commings are actually their fault.
Hammer,
Many women find staying home with children drudgery. I'm one of them. It is intellectually stifling and housework is just mind-numbing. In addition, staying at home shifts the balance of power to the providing spouse. Not all women feel this way, though.
I don't know all the origins of feminism, but I define it as the ability of women to decide for themselves instead of allowing society to decide for them. A person who thinks this way is my definition of a "feminist".
My definition of a "feminazi" is a person who imposes her ideal on other women and on society at large. If, for example, she derides women who choose to stay at home or take breaks from their career or expect the world to suddenly start revolving around feminine needs (forcing companies to accommodate pregnancy choices via legislation, for instance). These people are just fascists.
There is a lot of joy in spending quality time with children – reading, playing, discovering. Even that gets old if that's the only thing you do. There is absolutely no joy in the drudgery of changing crap-filled nappies, scraping dried-on food off the floor and scrubbing toilets. Although, I know at least two guys and one woman who love all that stuff. Bully for them.
Plus, no one likes to admit their short commings are actually their fault.
Why admit to something that isn't one's own fault, Hammer? Certainly government should have been there for these people! Are you that cold-hearted to not see this?
We're getting off topic. The main thread should be following Krugman's presentation. What one should garner from it is: Krugman is a Democratic hack with BDS.
Methinks,
Hammer interpreted my meaning correctly.
and here you also see feminazis as I had intended them to be seen:
My definition of a "feminazi" is a person who imposes her ideal on other women and on society at large. If, for example, she derides women who choose to stay at home or take breaks from their career or expect the world to suddenly start revolving around feminine needs (forcing companies to accommodate pregnancy choices via legislation, for instance). These people are just fascists.
Posted by: Methinks | Apr 15, 2008 12:05:31 PM"
and, that dear lady, is why I said what I did.
My lady is a feminist, an attitude I certainly appreciate, without being a milque-toast.
Hammer,
Since "want to work" is subjective and based on the response of the individual polled, I wonder how many say they want to work but make no effort to do so.
this is exactly why I wondered how reliable a poll or survey could be when anyone can lie and no one has any real means of establishing the truth of what is being said.
It is also why I am confident that such lying is frequent to a higher percentage then we would like to think. In other words I am confident that many people are perfectly happy being drones, but are embarassed to admit that that is what they are….so of course they are "looking" for a job.
Methinks: There is a little bit of a… let's say grey area, between the definition of "feminist" as used by "feminist groups" and as used by women who do not necessarily align themselves with such groups. What you term "feminazi" is pretty much what self titled "feminists" were, as opposed to what often women who are perfectly pleasant and simply want to exercise their rights of self determination call being a "feminist" today.
I am referring to the old use of feminist, those who said that women should do things that the feminists thought they should, and if they didn't, they were simply slaves to men.
Vidyohs: Yes, that was pretty much my point. Just because someone can't get the exact job they want does not mean there is no work for them, and like wise saying "Yes, I am looking for work" when there is actually zero effort being made is just as easy as saying "No." Thus I suspect the actual value of such poles is quite low, with a great deal of bias towards higher unemployment.
vidyohs and Hammer, I'm not surprised that we are in agreement on the definition of feminazi. Women's desire to exercise their rights of self determination (as Hammer so eloquently put it) has been the bane of fascists on both the far right and the far left. The far left has put me on notice that it's my duty to vote for the abhorant Hillary because she is also a woman. At the very beginning of my career on Wall Street, a male managing director at a very large investment bank took me aside and urged me to reconsider my career goals because "this is no business for a lady". I had to stifle a laugh. Absolutely hilarious.
WRT those who "can't" find a job: To pay for college, I worked a mind-boggling number of relatively low-skilled jobs. I remember applying for a job selling knives or something. The applicants were all gathered in a room and called to interview one by one. As I waited my turn, two people showed up. Both were visibly unwashed, wearing old, stained, filthy sweatsuits, their hair stuck out from their heads in visibly dirty clumps and a hair pick stuck out of the side of each head (a hair pick that clearly went unused). Obviously, they did not get the job. However, before they left, they asked the receptionist to sign a document stating that they showed up for the job interview. Apparently, to continue to collect welfare, they had to "prove" to the government that they were looking for a job. In that state, a construction foreman wouldn't have hired them to haul rubbish to the curb, but we faithfully count them as the unemployed who just "can't" find a job.
Take all of this a step farther.
I like what Zig Ziglar said, "Many people stop looking for work the moment they get a job."
Ain't it the truth.
How many people who get jobs remain unemployed? Do we count those suckers in the mix of stats?
Methinks:
Shame on you for thinking those women had the bath facilities to get into the right appearance for that job interview. Not everyone was as fortunate as you!
As a Real Estate professional with experience in rental property management, I can tell you that the Federal Section Eight housing program effectively keeps many males in their prime sidelined. Meaning, they are living with their girlfriend who has her housing subsidized or completely paid for through Section Eight. For these men, a roof over their head and food bought with food stamps is just the ticket they are looking for in life. They tend to be chronically unemployed or under-employed. If they take a job it's on their terms. They work when they want, not too hard and almost never on Mondays or Fridays…And, the worst case scenario for these males is that they peddle drugs on the side…