Monday, October 5, 2009

Labor Force Shrinkage

As described in last week's post Unemployment: Even Worse than the Headlines, has the labor force not decreased over the month, unemployment would have jumped to a level higher than 9.8%

But how uncommon is a shrinking labor force? This is the first year over year decline since the early 1960's.

And why wouldn't individuals stop looking for a job. As the chart shows below, the number of people who have been unemployed longer than half a year has spiked to record levels.

And the long-term implications via Alan Greenspan.

"People who are out of work for very protracted periods of time lose their skills eventually. What makes an economy great is a combination of the capital assets of the economy and the people who run it. And if you erode the human skills that are involved there, there is a real and, in one sense, an irretrievable loss."
Source: BLS


  1. Jake - nicely done and VERY pointed.

    Now that I've sold you on YoY can I sell you on smoothing? In fact on monthly data I like 3MoMA in the background and non-linear trends as the foreground dominant to really drive it home. Not lecture gdad on graph-sucking, or crafting :)!

    BtW - if you're interested in the LT outlook, jobs and what the implications are may I share:
    p.s. - any newsletter feedback to share?

  2. Shrinkage is bad in any and all settings, just my opinion.

  3. I believe every administration has done their part to hide their lack of performance with resprct to employment. And if I'm not mistaken, this leaving the workforce nonsence was Clinton's contribution. I suggest you start reporting the metrics where John Williams attempts to hold the government metrics to their original definitions.