"Notably, part of the decline in the unemployment rate was because workers left the labor force. The share of the population with jobs or hunting for one fell to 62.7 percent, its lowest level since 1978."
This criticism of unemployment statistics is parroted whenever an unemployment discussion is had. But those discouraged worker numbers are tracked too. They tend to go together, and the recent news about hiring increases is not due to a massive increase in discouraged workers.
Sometimes there really is a net increase in employment.
That's why even the rich get more annoyed when inequality rises. They see those making more than them pulling away. The knee jerk reactions to this tend to make the problem even worse (eg. lower taxes, justified by reducing social security).
In reality this is a problem. When everyone around you is making more, things tend to cost more - e.g. real-estate in silicon valley is atrociously expensive for what you get, so you need a solid dual income or high-earner single income to afford a house - as the aggregate of these go up, your ability to afford a house or an upgrade diminishes.
So much of middle class net worth is tied to the value of real estate, the conversation is really about the trend in home prices, and whether one bought at the peak of the market.
As a brief summary, as of 2012 the decline in labor force participation rate was about 1/3 due to demographic shifts and 2/3 due to the business cycle. The paper notes it was expected to fall even further, however individual "behavior changes" caused it to not fall as far.
The recession triggered changes in organiztion structure accross a wide variety of areas. This led to re-negotiation or termination of previously existing employment contracts. When there is a market failure to re-negotiate such contracts on mutualy agreeable terms, the parties are no longer in an employee/employer relationship. The parties are not in the workforce. Whether they are declared "unemployed" or not is a bit of a shambolic side debate about window dressing.
When you don't include short-term discouraged workers, it's easier to get better headline numbers even if the overall trend is about the same. Adding an estimate for long-term discouraged workers, it's not quite as clear that unemployment is reducing: http://www.shadowstats.com/alternate_data/unemployment-chart...
While I try to take all government-produced estimates with a grain of salt, I and many others consider ShadowStats's mysterious estimates much less reliable, due to a fairly obvious anti-government agenda and the simple infamous fact that they insist inflation is severely underreported despite not raising their subscription price in over 8 years!
You'd have to gather some data before bucketing them under "discouraged".
One side effect of Affordable Care Act is that it's possible for a 40-year-old corporate employee with savings, family and children, to leave their current job, work on new business and buy an affordable health insurance plan.
Previously lack (or low quality) of individual health plans would discourage anybody from leaving their corporate job, even if they accumulated enough savings to do it.
I don't buy it. For myself and other employers I know, we're just having an incredibly difficult time hiring low skilled employees. $15 an hour for menial work? Maybe 4-5 responses from craigslist. Contrast this with a couple years ago when there would have been dozens of applicants. Labor seems tight.
I don't know what kind of menial positions you're hiring for but I have definitely seen companies with implicit hiring policies that would make it difficult to hire many of the people who are actually in need of menial work for employment. e.g. want menial work? Well you should still at least sort of remind me of the upper middle class/Ivy league types I am hiring for my salaried positions. Even in our current context of an industry dominated by affluent white males I think what I describe above is where race and class discrimination are worst for job seekers.
Hey, I'm an iOS developer desperately seeking work. I am also a vet, and I've had no luck finding work. Where can I go to get this work? I'll even do menial work.
The mandate of the fed should be changed to correct for the data problems evident here.
The "easiest" way to increase (inverse) metrics is always to move people from the measured bucket (unemployed) to the not-measured one (non-participating).
If we shift inflation from assets < 1 year life to those of longer duration, we can manipulate that metric pretty well too.
Until composite metrics are better disseminated and understood, these things will remain underlying problems.
The statistic that should be used is full time job equivalents over the preceding year - any other statistic can be misused, but actual hours worked is pretty reliably determined and increases and decreases have real meaning.
> The statistic that should be used is full time job equivalents over the preceding year - any other statistic can be misused, but actual hours worked is pretty reliably determined and increases and decreases have real meaning.
To the people dissatisfied with the headline unemployment rate, we can also look at the U5 unemployment rate, which includes discouraged workers. It tells roughly the same story as the headline rate, U6 which includes part-for-economic-reasons workers seems to be falling a bit faster than the headline rate:
Others here have touched on some of the issues with the headline number, such as quality of jobs created, full-time employment rate, the real unemployment number (counting discouraged), and the labor force participation rate.
Another aspect to the current situation that really bothers me, is that we're only starting to claw down the real unemployment rate after five years, approximately just in time for the next recession to hit. GDP growth has basically been falling for three years now. Getting slammed with another recession, with 11% real unemployment, is going to hurt a lot.
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[ 3.3 ms ] story [ 83.8 ms ] thread"Notably, part of the decline in the unemployment rate was because workers left the labor force. The share of the population with jobs or hunting for one fell to 62.7 percent, its lowest level since 1978."
http://www.nbcnews.com/business/economy/unemployment-rate-dr...
Another article I read earlier today also said that the average wage fell by 1 cent.
From a blog post on http://www.calculatedriskblog.com a few months ago, highly recommend the blog.
Why should I care if the pie is getting bigger if I'm getting smaller peice at the end of the day?
Give me a smaller pie and a bigger peice of said pie anyday.
That will change when the jobless rate returns to normal.
Sometimes there really is a net increase in employment.
[1] https://www.google.com/search?q=research+suggests+that+happi... [2] http://www.usc.edu/dept/pubrel/trojan_family/winter07/happin... [3] http://vanneman.umd.edu/socy699J/GrahamP02.pdf [4] http://isites.harvard.edu/fs/docs/icb.topic620591.files/Indi... [5] Relative Income Hypothesis. I will leave the googling of this as an exercise for the reader.
The graph from that article http://img.washingtonpost.com/blogs/wonkblog/files/2014/10/M... suggests median net worth was doing quite well up until 2007-2008.
Identifying Factors behind the Decline in the U.S. Labor Force Participation Rate
http://macrothink.org/journal/index.php/ber/article/download...
What does that mean?
One side effect of Affordable Care Act is that it's possible for a 40-year-old corporate employee with savings, family and children, to leave their current job, work on new business and buy an affordable health insurance plan.
Previously lack (or low quality) of individual health plans would discourage anybody from leaving their corporate job, even if they accumulated enough savings to do it.
http://randydillon.net
The "easiest" way to increase (inverse) metrics is always to move people from the measured bucket (unemployed) to the not-measured one (non-participating).
If we shift inflation from assets < 1 year life to those of longer duration, we can manipulate that metric pretty well too.
Until composite metrics are better disseminated and understood, these things will remain underlying problems.
> The statistic that should be used is full time job equivalents over the preceding year - any other statistic can be misused, but actual hours worked is pretty reliably determined and increases and decreases have real meaning.
http://www.calculatedriskblog.com/2014/10/september-employme...
http://www.calculatedriskblog.com/2014/10/comments-on-employ...
http://www.macrotrends.net/1377/u6-unemployment-rate
Another aspect to the current situation that really bothers me, is that we're only starting to claw down the real unemployment rate after five years, approximately just in time for the next recession to hit. GDP growth has basically been falling for three years now. Getting slammed with another recession, with 11% real unemployment, is going to hurt a lot.