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Sunday, September 16, 2018

SERIOUSLY IMPORTANT

The journalist David Leonhardt has this Op Ed in the NY TIMES this morning.  It is, I think, one of the most important and insightful pieces I have read in a very long time.  Here is just one fact cited by Leonhardt that stood out for me.  The official unemployment rate in the United States is currently just below 4%.  But the percentage of men age 25-54 who are not employed is slightly below 15%.

Think about that fact.  In an economy as close to official full employment as you are ever likely to see, 15% of adult men in prime wage earning years are unemployed, and two thirds of them do not even show up in the topline unemployment figures because they have simply given up looking for work.

The Bureau of Labor Statistics experts know this, of course.  Their work is the source of the figures Leonhardt cites.  But virtually none of the public discussions of economic affairs mention these figures, nor do these facts play any role in policy debates in Washington.

Why don't these men [and women, of course] show up in the official unemployment figures?  Because those figures are generated by monthly household sampling conducted by the BLS, whose employees ask, as they go door to door, "Are you now employed full time or part time?  If you are not employed, have you looked for work in the last month [or, in some surveys, two months]?"

If the answer to the first question is "no" and to the second question is "yes," the person is counted as unemployed.  But if the answer to both questions is "no," the person is not counted.  That person is considered not to be in the labor force.

If you think about this simple set of facts for a moment, much of contemporary politics makes much more sense.

3 comments:

Jerry Fresia said...

"But virtually none of the public discussions of economic affairs mention these figures, nor do these facts play any role in policy debates in Washington."

In part because of the fawning over St. Obama and his great recovery which continued to shovel money to the very top while providing crappy part time and temporary jobs to the vast majority. The great recovery has left the bottom 60% worse off than they were in 2008.

Which helps to explain turnout, increased racism among white working class voters, the Trump victory, and the tone deafness of the meme, America is Already Great.

MS said...

Regarding seriously important news, I have finally had it with Sen. Feinstein. In a previous comment, I was critical of her ineffectual questioning of Judge Kavanaugh, in which she accepted his routine answers to here questions and failed to follow up with more probing questions to reveal the speciousness of his answers. Now we have the information that she failed to disclose to her Democratic colleagues that she had received a letter from an anonymous writer accusing Kavanaugh of, essentially, attempting to rape her when he was in high school. Feinstein’s justification for her nondisclosure was that the alleged event was too old to make an issue out of, plus she was respecting the woman’s desire to remain anonymous.

The woman has now gone public and revealed her identity. She is Christine Ford, a professor of clinical psychology at Palo Alto University. She asserts that Kavanaugh was drunk at the time and that she feared for her life. Imagine if Cory Booker and Kamela Harris had had access to this letter during the hearings. They might have been able to persuade Prof. Ford to go public earlier and testify at the hearing. This would have been a repeat of the Anita Hill confrontation and could have proved more successful than Prof. Hill’s accusations against Clarence Thomas were. In this age of the Metoo movement, adolescence and intoxication would not have been acceptable excuses for attempted rape. Judge Kavanaugh would, as he has, denied the accusation and the Republicans would have circled their wagons and accused the Democrats and Prof. Ford of smearing the name of a good family man. But the accusation, supported by Prof. Ford’s testimony, may have been enough to move Senators Collins and Murkowski to oppose his nomination to the S. Ct., and would have given cover to the Democratic senators in red states who are concerned about their re-election to also oppose the nomination. We will never know, because the revelation is now probably too late to derail Kavanaugh’s nomination. For want of a letter, the Supreme Court was lost.

I hope Sen. Feinstein loses her re-election bid against De Leon, also a Democrat.

marcel proust said...

Except that this way of defining the labor force has long been the case, going back decades. The issue is not this definition, but the low employment ratio (or EPOP: employment to population ratio) for prime-age males. What is important for current politics is NOT how the labor force is defined but this EPOP. It is one of the reasons that labor economists (e.g., Jared Bernstein) usually use the EPOP rather than the unemployment rate.

If you want to look at it for yourself, click on the the BLS data page.

On that page, scroll down to "Employment" and under "Monthly", look for "Labor Force Statistics". In that row, click on "One Screen Data Search". This brings up a bunch of choices to make. For the particular data under discussion, choose
1) Sex: Men
2) Race: All Races
3) Hispanic or Latino Ethnicity: All Origins
4) Age: 25 to 54 years
5) Education [No choice to make here]
6) Marital Status: All marital statuses
7) Labor Force Status: Employment-population ratio
8) Seasonal [choose whichever you prefer]
9) Periodicity [choose monthly or quarterly, whichever you prefer]

Make sure you allow pop-ups. Clicking on Get Data will open a new tab with data for the last 10 years, but you can change this to start as long ago as 1948; you can also specify that you want a graph over time. What you see then is the following; the Employment ratio for prime-age males ranged between 90% and 95% from 1948 through 1974, although it began a long term decline with the beginning of the Nixon presidency; except at the depths of the early 1980s recession (well, actually a bit after the depths, by conventional dating, since the labor market is considered to be a lagging indicator), it ranged between 85% and 90% until late 2008 (what happened then?). It fell briefly to below 80% in early 2010 and has been increasing slowly ever since, to where we are now.

This is all very dry. I suspect the important thing, for how sour the current environment is, is all the ancillary costs of these numbers... strained and failed marriages, homelessness -- actual and feared -- postponed or foregone education and training, higher personal debt: not only the economic costs of these phenomena, but the emotional consequences as well.

In any moderately free society, how to define the labor force -- who is in and who is not -- will be difficult. Some ambiguity even pertains to employment, since in bad times, as Dean Baker oft-reminded his readers during Obama's first term, many of the employed who were working part-time wanted to be full-time, and others were working jobs for which they were over-qualified. Nevertheless, focusing on who the employment ratio makes for a more reliable broad brush picture.