In a response to my post detailing how the employment rate could drop while the number of employed individuals continued to drop (i.e. fuzzy math), I received the following post from Ryan in connection with my chart showing the employment / population rate returning to levels seen 25 years ago.
Jake - why did you choose to leave out the 1970s and early 80s which would have likely shown the recent #s aren't out of line?My response was:
i was just trying to show that we are at our 25 year low to put this into perspective. i didn't mean to cut off any data intentionally, but i can see where it would seem that way, so i do apologize.So to make amends, here is the data since 1964 (the first year in which such data is available).
Is the employment to population ratio up since the 1960's? Sure. But that doesn't show the full picture. I continued...
that said the 1960's - 1970's data is too stale. that was when the two-income family didn't truly exist (i.e. when women weren't necessarily expected to work and/or given the same opportunity to do so). thus not remotely an apples for apples comparison.Here is the data showing just that. While the employment to population ratio has risen from the 1960's, the number of hours worked is down dramatically. By looking at the aggregate amount of both (the employment to population ratio multiplied by the # of hours worked per week), we see the following....
A figure not only at the lowest level in 25 years, but the lowest in the full 45 years worth of data available.
Source: BLS
excellent post. Now to get the real "eye popper".... multiply the last graph by the trend in wages.
ReplyDeleteThat will reflect the "earning power" (hence spending power) of the population.
I'm guess that will be a VERY scary graph....
good idea... will see if i can't get that set for tomorrow morning.
ReplyDeleteGreat chart, and one that's not commonly seen. Thanks!
ReplyDeleteBeautifully done and nicely argued. Having looked at those numbers myself I took the E:P ratios from the '60s to '80s as representing a huge structural shift as more women entered the work force. Hence your original graph, which was effectively in the same regime, was a reasonable look at cyclic and secular changes. Your bottomline is intact imho.....we've had a major cliff-diving drop in labor force participation which, given the l.t. prospects for poor job creation, represents a new structural shift.
ReplyDeleteI'll second annon, this is a great post and adding real (inflation adjusted) wages should be interesting. Even more revealing might be to show that in two graphs, one based on total compensation and the other on compensation received only by the lowest-earning 95%.
ReplyDeleteAlso I think it's generally agreed that there was a lot of undocumented immigration (mostly of young adults would be my guess) in 2000-2008. Would that be enough to explain why the amount of work generated by the economy didn't seem to recover to a higher level during those years?
I'd also be very interested to see public-sector work stripped out. Not that public sector jobs aren't "real jobs," but certainly they aren't the economy's engine of growth. For that matter, stripping out the FIRE sector from the rest of the economy might also be revealing.
Cheers!
While I'm pretty much a bear about our current economic situation, let me try to suggest a "green shoot" in the chart you've provided:
ReplyDeleteIf this recession is like that early 1980s recession, we could see a sharp recovery in hours worked as we come out of this.
Unfortunately, I can think of a half-dozen reasons that won't happen--especially if you add the wage trend as suggested by your first poster.
some might say we are more "productive".....hence fewer hours...but if we are, and time is money, then wages should go up dramatically. (i.e. if you can pay a guy 10% more to get a job done in 50% less time...thats a good ROI).
ReplyDeleteI'm guessing that our buying power is dropping off a cliff, hence the drop in prices.
been following the blog through my rss for a while, first time commenting.
ReplyDeletei would like to pile on to the requests to see this chart multiplied by real wages.
also, great blog, and i intend to continue patronage.
it's already posted my man
ReplyDeleteI haven't said this to you before, but you do some neat stuff, and this is one great example of it. Congrats.
ReplyDeleteDavid