The state of the labor market

If an employer wishing to expand or start a new business needs information on the available local labor force, including wage rates and skill levels, the LMI Research and Statistics Section can help.

Did increase in the minimum wage add to costs and exacerbate unemployment?

In chart 1, the 1981 recession ran its course fastest -- at least in terms of unemployment returning to its pre-recession level. Support for a supply-side approach to recession-fighting?

Why do so many of these types of metrics use "non-farm" numbers? Why are they excluded? It seems like an arbitrary industry to exclude?

Just a guess, but it could be because so much farm labor is seasonal, with very big labor forces at harvest and very small the rest of the year. Good question, though.

Chart 6 is flawed unless they accounted for changes in how the BLS reports their statistics in the 89 years that have passed since the 1921 recession.

If you use the broadest indicator, we're up to 17% - 18% already (which, in my rudimentary understanding is the one that most closely resembles historical reporting). That makes this second to only the Great Depression.

But the worst of the storm has passed! Good thing!

"If you use the broadest indicator, we're up to 17% - 18% already (which, in my rudimentary understanding is the one that most closely resembles historical reporting)."

You are incorrect, although you're not alone in thinking that.

The current U-3 -- the most common unemployment stat used -- is roughly comparable to the most commonly seen unemployment stats we have from the Great Depression. The higher U-6 (your "broadest indicator") is much more inclusive than that.

There's a nice paper detailing attempts to compare and 'back-estimate' U-3 and U-6 for the Great Depression summarized at
http://www.economicpopulist.org/?q=content/u3-a...
http://www.scribd.com/doc/13282170/Unemployment....

This estimates that at the peak of the Great Depression, the equivalent of U-3 was 25.2% and the equivalent of U-6 was 37.6%.

The current unemployment figures are bad enough in reality, no need to exaggerate them!

So, I realize that this post is awfully stale. Hopefully you'll get an email about this telling you that I commented.

Why is it that most free market economists I've read believe the way I do? The fellow over at shadowstats has practically made a living off of just this type of information. I'll read through the whole paper at some point (believe it or not -- even with a week passing since you posted this, I still haven't gotten around to it).

I know (although, this is again from my same sources) that over the past couple decades (not going all the way back to the '30s) unemployment has been manipulated to exclude workers. Did the government (or other counting agencies) adjust the metrics to become more broad from the 30's till the 60's? I guess that's what doesn't make sense to me.

Perhaps I'm tipping my hand as I'm always quite skeptical of government, but why would they fess up to under-reporting numbers when they could just pass the buck to the next administration to keep living the lie?

I normally think of myself as quite skeptical as well; the difference may be that I also have a great deal of respect for the statisticians and economists at BLS and sister agencies.

I have enjoyed John Williams/ShadowStats poking at various inconsistencies, but that doesn't mean I think his figures are better than BLS. The word 'gadfly' comes to mind, and I tend to like gadflies but do not necessarily follow their advice. I should point out here that I am not an economist; but I have been involved enough in social (and other) research to understand the difficulties involved in assembling and updating the U3/U6 and CPI and other stats. At some level it's just an impossible task to do, but the real issue is the chronic one: any national statistic cannot reliably approximate your own individual experience, and people prone to conspiracy theory tend to interpret the difference as intentional and directed (that's not directed at you personally, but perhaps the people you've been reading).

You may be very interested in this discussion as well, although somewhat old and focused on CPI rather than unemployment: http://www.econbrowser.com/archives/2008/09/sha...

So when does the stimulus kick in?

"That's a tough minute. It's like waiting in the shower for the conditioner to work."
- George Costanza

I agree - I saw that this morning from Thoma.

I think the most interesting is chart 3. Some version of charts 1 and 2 (employment and unemployment) have been produced a lot recently. What you don't see as much of is the chart 3 time series on labor force growth. What was so striking about that was the consistent erosion of labor force growth - the 1973 recession had higher growth than 1981, 1981 was higher than 1990, etc. etc. That steady, decades long weakening was striking.

It's not all bad. A huge part of that, I'm sure, was the tapering off of the entry of women into the workforce. As that trend started to plateau, of course labor force growth would start to slow down.

What would be interesting would be to look at chart 3 for men only. Maybe what I found so striking isn't that striking after all, and it can all be explained by female labor supply.

Regardless, very interesting charts - thanks for sharing.

daniel,

One more workplace change I've noticed is the increased number of early retirement offers and acceptances. It's not a large number of the workforce from any one birthyear. But it seems to attract a significant number of persons between the ages of 55 and 65. I think early retirement is more palatable for some of these workers because of savings accumulated through IRA's and 401K's. Even though the overall savings rate has declined to zero or near-zero in the U.S., a significant number of us have taken advantage of tax-deferred savings options to build nice nest eggs.

I do not remember hearing or reading much at all about early retirees back in the 70's and even the 80's.

"A huge part of that, I'm sure, was the tapering off of the entry of women into the workforce. As that trend started to plateau, of course labor force growth would start to slow down."

I agree that may explain some of the slowing of labor force growth. But even more of it may be simply the variation in the birth rate. The 1930's and WWII baby bust was followed by a 19 year baby boom. Then the 1970's baby bust came into play. So the entry of Boomers into the workforce had a striking effect in the late 60's, through the 70's. Once the Boomers were absorbed and the workforce was significantly larger, the growth rate could not be sustained.

Births have fairly stabilized in the 4 million range, but the workforce will continuie to grow until about 2016. That's when the post-Korean War babies - the ones who first reached the 4 million births level - finally begin to retire in large numbers.

And misleading. The point slope of the 1990 recession is higher. It just doesn't look as bad because of their choice of how to align the years. It rose faster, but levels out sooner. So the claim that the current unemployment rate is rising faster than any other post WWII recession is false.

It looks like 1981 may rise faster as well, but it's hidden by the other lines.

Yes, there is *more* unemployement, but it's just false to say that it's rising faster.