U.S. fact of the day

by on September 4, 2011 at 10:57 am in Current Affairs, Data Source | Permalink

The US has roughly the same number of jobs today as it had in 2000, but the population is well over 30,000,000 larger. To get to a civilian employment-to-population ratio equal to that in 2000, we would have to gain some 18 MILLION jobs.

Here is more.  People will differ, of course, in terms of how much they see this as growing leisure or stagnation.

By the way, the current unemployment rate for those with a Bachelor’s degree or higher is about five percent.  In which direction does that auxiliary fact push you?

Hat tip goes to Richard Harper on Twitter.

1 Tomasz Wegrzanowski September 4, 2011 at 11:14 am

> By the way, the current unemployment rate for those with a Bachelor’s degree or higher is about five percent. In which direction does that auxiliary fact push you?

If it was leisure and income effect, most educated would have highest unemployment. This is true about nowhere.

It’s insufficient demand, that’s all.

2 kebko September 4, 2011 at 1:00 pm

The recession clearly is at work, but leisure time has been dropping among the educated and rising among the unskilled for a long time. This would be expected in a wealthy, growing society, as the educated have higher opportunity costs of leisure. Also, it’s probably just a statistical remnant, since the years where you have the lowest stated income (retirement and educational years) are also the times you’ll have the most leisure. This factor was smaller when there was less education and retirement was shorter.

3 Slocum September 5, 2011 at 10:23 am

No — truly voluntary leisure wouldn’t show up in unemployment rates (you have to be seeking work to be counted as unemployed and have to be seeking full-time work to be counted as underemployed). Leisure would take other forms — for example, lack of paid work as teenagers, earlier and longer retirement, more years spent in stay-at-home parenting (possibly combined with part-time work). So what you really want to look at is labor force participation. What is the labor-force participation of those older than 55 or 60 among those with at least a bachelor’s degree vs those with less education? What is the labor force participation of educated vs uneducated women with young children? What is the labor force participation of teens from educated families vs uneducated families?

4 A Berman September 4, 2011 at 11:28 am

If leisure time were more equally distributed, we’d have a lower unemployment rate.

5 Stan Greer September 4, 2011 at 11:33 am

The relevant comparison to 2000 is not the total population increase, but the total (standard) working age population increase. I don’t have the data in front of me, but the working age population increase over the past decade was far smaller than the total population increase.

6 CBBB September 4, 2011 at 12:38 pm

What does working age mean? A lot of people who should have retired are not retiring any more.

7 Make Believe Media September 4, 2011 at 12:08 pm

“The relevant comparison to 2000 is not the total population increase, but the total (standard) working age population increase. I don’t have the data in front of me, but the working age population increase over the past decade was far smaller than the total population increase.”

I think you need to adjust for two effects.

1. A large number of the illegal immigrants from south of the border start working before the standard age, and

2. Because of the lousy economy, people who can are staying in the workforce longer than they used to.

However, I think Tyler fails to notice that those who like to work don’t have much utility for leisure time (it’s genetic by the way) and that a large proportion of that population increase consists of people who have genetically predisposed non-aptitude for the sort of work required by the direction the US economy is taking. Flipping burgers is not going to cut the mustard.

8 JonF September 4, 2011 at 1:36 pm

Actually the economy has been adding lots and lots of low-skill jobs of the burger-flipping sort. Middle-skill jobs are the area that’s suffering the worst decline.

9 CBBB September 4, 2011 at 1:38 pm

Yeah I think that was his point – these burger flipping jobs are just not the sort of jobs that the US needs

10 darren September 4, 2011 at 5:36 pm

They are if you don’t want your burger to get burned on one side. Its all leisure and companies got cover to release ZMPeople.

11 CBBB September 4, 2011 at 5:48 pm

I make my own burger – this is just buying into Cowen’s ZMP con game.

12 Richard September 4, 2011 at 12:26 pm

For sure there is some component of growing leisure. Even with the work incentives in place through low marginal tax rates, I can’t find the motivation to work myself into the ground in my 20s. It’s far better to enjoy life at this stage when one’s health and youth still allows one to do fun things. Why wait until 65 to retire when 1. you may not make it to 65 and 2. by 65 you might be confined to a wheelchair and unable to do those things?

That’s also true for many of my generational peers, who are increasingly turning to geographic arbitrage as digital nomads. They remotely operate blogs that rely on AdSense, SEO, and direct marketing to earn anywhere between 4000 – 400000 per year and live abroad (SE Asia and Latin America are favourite places) where the cost of living are lower.

13 JonF September 4, 2011 at 1:37 pm

The vast majority of us will make it to 65, and will be decent health when we do.

14 The Anonymouse September 4, 2011 at 9:25 pm

Tim Ferriss! Why are you hiding behind a pseudonym? 🙂

15 Edward Burke September 4, 2011 at 12:37 pm

The auxiliary fact leads me to hope that a vast majority of working Americans with post-secondary educations will vote to make Barack Obama himself unemployed after January 2013, for their good and the good of the unemployed of whatever educational attainment: our President’s “employment-by-fiat” decrees (e.g., Solyndra) successfully stimulate unemployment at a cost of hundreds of millions of dollars, while his legislative “success” with ACA inhibits job creation by making provision of health benefits after 2012 a more deeply murky proposition for prospective employers. (Would a prompt SCOTUS ruling that ACA amounts to unconstitutional overreach clarify the latter issue even at this late date?)

16 CBBB September 4, 2011 at 12:39 pm

Obama is indeed a crappy President but not for the reasons you state.

17 Tom September 4, 2011 at 1:06 pm

For EXACTLY the reasons Edward state, and more.

18 CBBB September 4, 2011 at 1:37 pm

You guys are really grasping at straws with this ACA crap – any excuse eh? I’m not going to defend this guy he’s a crappy President but “uncertainty”? I mean there’s always uncertainty – what a joke. Yeah everything would be just peaches and cream if the ACA were to vanish sure sure.

Cue the cranky small business owner with the “Hey I want to hire but I don’t know what my taxes are going to be like next year” comment.

19 Edward Burke September 4, 2011 at 2:52 pm

CBBB: true, uncertainty always lurks–but, there’s uncertainty, and then there’s compounded uncertainty, which is what ACA has given all of us thus far, whether employers or employees, whether legislators or Federal judges, whether employed-with-a-degree or unemployed-with-no-degree. I won’t say SCOTUS will do us a favor simply by ruling “yea” or “nay” on ACA, I don’t know whether the Supremes will even look at ACA before Nov 2012; but ACA seems to have engendered broad and deep uncertainty, which is hardly helpful just now and will be no more helpful during the interim as we await its implementation or its overturn.

20 CBBB September 4, 2011 at 3:01 pm

The focus on this one piece of legislation is baffling when there are so many other obvious problems – the bursting of a massive housing bubble, high levels of household debt – it’s as if you have a car with no engine and 3 flat tires and your main concern is that the upholstery has some holes in it.

21 D September 4, 2011 at 8:50 pm

This is such BS. I’ve managed a growing company throughout the recession and the ACA never comes up in our staffing discussions.

22 Tom September 5, 2011 at 12:09 pm

I’ve been at a recruiting firm for 15 years. We talk to MANY small to medium size businesses to whom this is a large concern. Not their only concern, of course, but it certainly adds to the ‘wait and see’ position they’ve been taking.

23 JonF September 4, 2011 at 1:39 pm

Yes, let’s put the party that ran the country into the ground back in power! They’ve learned nothing and forgotten nothing– heck they gotten ever stupider and meaner– so I don’t doubt they’ll be ale to finish the job in just one term.

24 Andrew' September 4, 2011 at 7:44 pm

You are going to have to narrow that down for me.

25 Gary September 4, 2011 at 1:12 pm

How many with Bachelor’s degrees work in housing construction? I’d bet almost none.

The housing slowdown has created a swath of unemployed. Since their skill sets transfer only to a few other jobs that also are rarely occupied with persons with college degrees, then only those careers where a construction worker can reasonable obtain work have a high unemployment rate. There is a much higher supply of labor in those fields than in fields where a degree is necessary.

I suspect also that because most of those that dont have work didn’t make a high salary to begin with, the GDP doesn’t show the amount of pain that is out there. If the unemployment were evenly spread across all fields of labor, I doubt we would have seen a positive GDP since the 2008 recession started.

26 DK September 4, 2011 at 1:17 pm

Clearly, more immigration is needed to stimulate economy and thus jobs growth. Right, Tyler?

27 JonF September 4, 2011 at 1:34 pm

The employment to population ratio was at a historic high in 2000. Given the aging of the population we probably will not see anywhere near that ratio anytime this century, and it unrealistic to make that our goal.

28 MikeDC September 4, 2011 at 1:39 pm

I’ll go with stagnation. If stagnation is code for imposition of catastrophic price controls, regulatory hurdles and disincentives, coupled with demand-killing monetary policy. Want to reduce unemployment, especially amongst less skilled workers? Does anyone dispute the following would get us a boost in employment among less skilled workers?.

1. Target and catch up to longer term NGDP growth trend.
2. Reduce minimum wage by 20% (back to 2007 levels)
3. Repeal and do not implement the coming 50-100% increase in the effective minimum wage (and all low skill wages) that is Obamacare. It’s been estimated it’s going to run something on the order of $5/hr, which is a huge chunk of a working class wage.
4. Eliminate many of the paper-tiger job qualifications state and federal governments require for both their own workers and the workers of companies that do business with them. Bonus points for Davis-Bacon repeal too.

What’s the unemployment rate after those steps are taken?

29 CBBB September 4, 2011 at 1:44 pm

I doubt reducing the minimum wage will do much – yeah sure workers are cheaper but then those same workers have less money to turn around and spend – what’s the net result here? I’m not sure you’ve proven it’s higher employment.

#4 is good though, getting rid of the rampart credentialism that’s taken hold in a lot of areas is always a good goal.

30 Nathan Tankus September 4, 2011 at 3:31 pm

not to mention that a reduction in the minimum wage would probably make it even more difficult for people making minimum wage to afford basic necessities and thus reduce those worker’s productivity further actually leading to higher unit labor costs for the firm.

31 MikeDC September 4, 2011 at 9:10 pm

The net result is positive. An unemployed and unskilled worker obviously has less money to turn around and spend than an employed unskilled worker at minimum wage.

Minimum wage hikes for unskilled workers are also a non-trivial component of increasing food and grocery prices.

In practice, I’ll concede that an actual reduction in the min wage is probably politically impractical, and the reasonable alternative is go continue to grow the money supply to an expectation adjusted trend and let the inflation effect reduce the real wage (Note this isn’t a solution for the looming Obamacare wage hikes, which are an impending disaster for unskilled labor; coming soon to a place near you- Robot Mcdonalds!).

32 Nathan Tankus September 4, 2011 at 9:19 pm

it’s interesting how you simply ignored our arguments and reasserted your original argument under the guise of responding to CBBB. compare “An unemployed and unskilled worker obviously has less money to turn around and spend than an employed unskilled worker at minimum wage.” and “yeah sure workers are cheaper but then those same workers have less money to turn around and spend – what’s the net result here?”. you essentially responded to him questioning lowering the minimum wage would employ more people because of the negative effects on the demand for labor channel by saying that “of course lowering the minimum wage will lower unemployment! unemployment will be lower which lowers unemployment!” this isn’t even mentioning my argument that lowering the minimum wage might not even lower labor costs which was your original mechanism.

33 MikeDC September 5, 2011 at 10:22 am

Perhaps you can explain the mechanism by which lowering the price of labor reduces demand for labor? It’s true, I didn’t think it necessary to include a proof of the law of demand. 🙂

What you guys are calling “demand for labor channel” effects are really two separate things. The first is supply effects in the labor market. Are workers willing to work for less? Well sure, there’s 15% unemployment among that type of worker. There’s a huge pool of people out there that would like to be working (and saying they’re going to be unproductive because they can’t afford basic necessities… like what, they’re going to be malnourished? No… did you know that something like half of min wage workers reside in families already in the upper half of the income distribution?).

Second, what are the demand effects for goods and services as a whole? Well, the obvious point here is that min wage workers are still a relatively small component of the labor market, even though they represent a fairly significant chunk of food and grocery costs, for instance. So even if reducing the min wage results in reduction of (effective) demand for already employed min wage worker X (he has less to spend), newly employed min wage worker Y, well she has more to spend, because she’s no longer unemployed. Further, the vast majority of people out there (say folks A-W) can now buy some of their necessities slightly more cheaply, which leads to them being able to buy more other things (a positive income effect for most people).

This final point is really one of the more obvious but less talked about money illusions that made it so hard to get out of the Great Depression and is making it so hard to get out of this one. Years were spent fruitlessly trying to artificially prop up prices, and it never works. In fact, it breaks markets like crazy. On the other hand falling prices, counter intuitively, make it possible for people to get by with less.*

* That doesn’t mean general deflation is good. In fact, we’ve not had enough inflation, but the solution is not to destroy markets one market at a time. It’s simply to increase the money supply.

34 CBBB September 5, 2011 at 2:24 pm

So half of minimum wage workers are from families in the upper income distribution? Are you talking about teenage workers? What about the other half – I think there’s an awful lot of people who struggle on the current minimum wage, cut too much and it might not even be worth working for some people.
Slightly cheaper products won’t necessarily lead to any additional spending if people take the savings and service their debt which I really suspect is what will happen in this current economic climate.
I understand that in theory you can have this nice story about how cutting minimum wages lowers the marginal cost of a worker and so will make MP-MC positive so more minimum workers will be hired. I’m just skeptical that in the real world this model has any meaning, for one thing I have a feeling that a lot of places that rely on minimum wage workers also tend to be frequented by minimum wage workers (Walmart, McDonalds, dollar stores, etc.). The other thing is that in practice the minimum wage can act like a floor for the wages of a lot of non-minimum wage workers so the affects of the decrease could spread beyond a “relatively small component of the labor market”.

All in all, the big problem is the high levels of household debt and the lack of genera demand – not really that burger flippers are too expensive.

35 Nathan Tankus September 5, 2011 at 3:06 pm

exactly my point cbbb (although i think you meant wage cut)

to add to what you are saying, in the neoclassical theory of wage rate determination, future productivity is assumed to be known. therefore the nominal wage being determined is the nominal wage for a particular number of hours of a particular quality of work. in the real world this simply isn’t true. employers pay out a set nominal wage per unit of time for an uncertain quality of future work. the point i was trying to make is that a fall in the nominal wages of minimum wage workers may actually lead to a deterioration in the quality of future work (for a variety of reasons, not just inability to keep up with cost of living) so that labor costs per unit of output (what employers really care about) would actually rise, meaning that the supply price of labor wouldn’t fall at all.

on to your point that high unemployment means people are willing to work just as hard for less nominal wages, the data unequivocally says you are incorrect. you are right that there are short run kaleckian effects (ironic that you make a kaleckian argument in the midst of a whole bunch of neoclassical arguments) where employers squeeze more productivity out of workers in the beginning of a recession but overtime productivity falls when unemployment is higher. i am not implying causation here, simply pointing out that your argument does not fit the empirical data. see for yourself:http://4.bp.blogspot.com/-D-Y4N-kTngE/TlHrP3F9EmI/AAAAAAAAAuA/R9C0GfFTOdg/s1600/Chart+0821+for+blog.jpg

36 CBBB September 5, 2011 at 1:02 pm

You instantly assume your own conclusion – how do you know unemployed workers will end up employed due to a minimum wage hike? If there’s a drop in demand due to wage cuts across the economy then more unemployed people might not be employed. You can’t just assume your own conclusion.

37 MikeDC September 5, 2011 at 10:19 pm

CBBB, I see you saw my response from earlier. The nutshell response is simply that there is a lot more theory and evidence to support the proposition that “minimum wage hikes cause unemployment” than the opposite. This is an extremely well researched topic in econ, and while a few significant papers haven’t found a link, many, many more have. I’d start from a very simple proposition: second order effects don’t dominate first order effects. Thus, if you eliminate a deadweight loss (resultant from a minimum wage), the result is gonna be positive. My intuition is actually that the second order effects are actually positive as well.

Regarding minimum wages in general, it’s true there are plenty of legitimately poor people who struggle on the min wage. That said, consider your point about folks dropping out of the labor market in the context of employing the struggling poor vs. the perky middle class teenager. Life ain’t fair in a variety of ways and one of them is that employers often prefer to hire perky, reliable middle class kids instead of frazzled, struggling poor parents. Kids get sick and cause the struggling poor parent to be tired or simply not be able to get to work. On the other hand, struggling poor people looking for work do want the money. They need the money. Perky middle class kid would like the new iphone and to impress his date this weekend, but if he doesn’t think it’s worth it, he’ll sit at home and play his xbox. In short, one of the really sucky things about an artificially high min wage is it very often works against those who need the jobs the most by pitting them against folks with higher reservation wages and what appears to be “better” employment characteristics.

I also think you also need to be careful in thinking out the “stocks” of people you’re measuring in your head here. Though min wage workers frequent Wal-Mart, for instance, most customers there are not min-wage workers. So lots of folks get “extra money” to go out and demand something new. Even if it’s servicing debt it’s still a win-win proposition. If your suspicion is right and the extra goes to paying down debt, then isn’t that something that needs to happen before we can go again? My suspicion is simpler than that; one man’s debt is another man’s income. The debt payment is a transfer and there’s still a reasonable propensity to consume the extra by whomever ends up with it.

38 Jim September 4, 2011 at 1:47 pm

> the current unemployment rate for those with a Bachelor’s degree or higher is about five percent

Which is what the rate was for EVERYONE when Obama was elected. And the press complained it was astronomical.

This is pretty thin gruel to defend Obama on. By next summer, Krugman will be saying that if you’ve got a PhD in nuclear engineering and you’re living in Los Alamos, your unemployment rate is only five percent. Woo-hoo!

39 CBBB September 4, 2011 at 1:56 pm

Guess I missed the column where Krugman started carrying water for the Obama administration, which one was that again?

40 JDT September 5, 2011 at 9:56 am

The unemployment rate was 6.7% before Obama was elected, and over 7% by the time he was inaugurated. Don’t let facts get in the way of your compelling story, though. From Nov 07-Nov 08, unemployment went from 4.7 to 6.7%.

41 Matt September 4, 2011 at 1:50 pm

Is the relevant time period for the stagnation hypothesis 2000-2008 now? Or does it just shift around wherever confirmation bias will lead it?

42 CBBB September 4, 2011 at 1:55 pm

Tyler’s theories are very flexible – they’re basically whatever he needs them to be whenever the data changes.

43 Niall Allen September 4, 2011 at 2:11 pm

If every business in America were forced to give their employees 5 weeks paid vacation time per year, what would be the effect on employment? Discuss.

44 joshua the postlibertarian September 4, 2011 at 3:17 pm

Why should we discuss hypothetical policies that would have a negative effect on employment? Or are you seriously positing that immediately reducing the value of every unemployed person by 5/52 would make them more employable?

45 Niall Allen September 4, 2011 at 4:06 pm

Let’s say part of the reason for unemployment is growing leisure demand in the US, as the post questions. E.g., you’ve got people who have worked at jobs for years who only got 2 weeks of vacation suddenly without work. Do they all immediately look for new work, or do some of them — those who have saved some money — decide they prefer to take an unpaid vacation for the next 6 months or so? And do some of those people now find themselves in a position where it’s much harder to get hired now because they made the unwise decision — unwise per the conventional wisdom — to have a gap in their employment record?

Who is to say that the structural problem in the economy isn’t partially a *structural illusion*? If we can have money illusion why not structural illusion?. I define it as the illusion employers have that unemployed workers are ZMP merely because they are currently unemployed.

I’m seriously positing that leisure is a supply side problem in the US and that if employed workers had more of it they wouldn’t choose such long unpaid vacations between jobs.

46 Ron Potato September 5, 2011 at 11:14 am

Are you nuts? Your explanation for a recent, long, and deep recession is that employees suddenly want more leisure time?

The better answer is: business cycle, debt saturation, and structural changes from technology and globalization?

47 joshua the postlibertarian September 4, 2011 at 9:01 pm

Ah, that is something entirely different. I thought you might be positing that if all workers had more vacation than businesses would hire more workers to make up for the reduced activity – a variant of the lower wages argument. I suppose I am not smart enough to argue whether or not more vacation would make the unemployed more interested in working, but I would suspect it would make businesses less willing to hire them, and I’m not sure we need to be crimping the demand side right now.

48 tomrus September 4, 2011 at 2:40 pm

Perhaps on Thursday President Obama could lower the unemployment rate to 5% by announcing that by fiat he was giving everyone a BA degree. After all if the Fed can just print money…

49 CBBB September 4, 2011 at 2:45 pm

The whole 5% unemployment rate for university graduates is a totally meaningless statistic. Unless Tyler has statistics on UNDERemployment rates then it’s meaningless. Spending 4 years and going 20K in debt to end up working at McDonalds or Walmart is hardly a sign that a university degree is really worthwhile but this is the reality for many of the so-called “employed” graduates – simply displacing High School graduates at low-skill jobs.

50 Richard September 4, 2011 at 9:45 pm

I doubt that bachelor degree holders are displacing HS grads at low skill jobs. Not only are these jobs less desirable (college grads think it’s beneath them) but employers might prefer to hire someone who isn’t overqualified, presumably bored out of his mind doing menial work, and itching to move up when the economy gets going again.

51 CBBB September 5, 2011 at 1:20 pm

Well as someone in this demographic I can tell you that there are indeed many university graduates working low-skilled jobs typically held by HS grads. When you have big loans and there’s no alternative work – employers know you don’t have a choice and I guess they figure a degree signals better work ethic or something. The economy won’t be going for a long time and the way modern hiring practices work is if you haven’t worked in your field in certain period of time then you have no chance of getting back in – you’re locked out. Employers know this and so don’t have to worry about grads feeling low-skill jobs when the economy gets going again.

52 Landon Staiger September 4, 2011 at 2:40 pm

@DK: I assume your job-creation strategy for Detroit is to built a fence around it and make sure as few people as possible would enter that city, thereby automatically creating an efflorescence of prosperity and jobs there.

Oh, it isn’t? Then why do you think the solution to a lack of jobs in the U.S. is to fence people out of the U.S.? I’m sure there’s a frightfully sophisticated model of economic growth in your head that underpins your nuanced views; it’d be lovely if you’d explain it to us simpletons.

Self-selection usually ensures that knee-jerk mercantilism is mercifully rare among Tyler’s commenters.

53 The Anti-Gnostic September 4, 2011 at 10:31 pm

Yeah. It’s this really abstruse model called supply and demand. Throw in social services and birthright citizenship for the kids and distortions are assured.

BTW, the solution for Detroit would be to fence a certain majority of its population out. ‘Gentrification,’ in polite terms.

54 Nathan Tankus September 4, 2011 at 2:57 pm

“By the way, the current unemployment rate for those with a Bachelor’s degree or higher is about five percent. In which direction does that auxiliary fact push you?” it says to me that a large push to increase the share of the population with bachelor degrees or more would probably do more to increase unemployment and decrease wages among people with bachelor degrees then anything else. unless of course, a jobs program is implemented or indirect private employment is generated through raising demand for output from private firms.

55 CBBB September 4, 2011 at 3:09 pm

Yep, most of the current graduates are simply pushing people with high school diplomas out of low-skill jobs – that’s why underemployment statistics are important not merely unemployment statistics. All this is is a redistribution of jobs, it’s not the case that (as many of these academics want people to believe) that a lot of graduates are getting quality, university-level jobs.

56 Floccina September 4, 2011 at 6:31 pm

By the way, the current unemployment rate for those with a Bachelor’s degree or higher is about five percent. In which direction does that auxiliary fact push you?

If you can get a college grad you would mostly hire him ahead of a non college grad, so in a time of high persistent un-employment why would we not expect unemployment to be much lower among college grads?

57 Nathan Tankus September 4, 2011 at 7:38 pm

this isn’t necessarily the case. employers tend to not hire people with too high a skill set relative to the prerequisite skills needed for a job. this is logical if an employer thinks a phd or college graduate would be discouraged and less productive flipping burgers at McDonalds then a high school drop out (or expects to be paid more based on his/her skill set).

58 Andrew' September 4, 2011 at 7:43 pm

Now, auxilliary fact stated this way:

1 in 20 people spent 4+ years training and someone paid tens of thousands of dollars for this training in order to be unemployed.

59 CBBB September 4, 2011 at 7:45 pm

And not to mention all those people who are employed at jobs you could get with a HS diploma

60 Benny Lava September 5, 2011 at 12:12 am

“the current unemployment rate for those with a Bachelor’s degree or higher is about five percent”

Unemployment for college grads under 30 is about 9%. What does that tell you?

61 Matt September 5, 2011 at 1:11 am

I would guess that there is a fair amount of tumult in the job market for 21-25 year-olds, even in good times; so the unemployment level for this group in previous periods may be surprisingly high. But if this number is actually true, it goes a long way towards explaining the current grey mood. You should expect a society to be demoralized when the young and educated are not doing well.

62 CBBB September 5, 2011 at 3:34 pm

Yeah focusing on university graduates as a whole doesn’t tell you much – you have to look at how newer graduates are doing and it’s not well. In addition how many of the graduates who ARE employed at actually working at high-skill jobs?

63 Chris R September 5, 2011 at 4:42 am

Using household survey data and the accompanying population controls, going from 2000.01 to last month would have us short about 15 million jobs. Interestingly, at the end of expansion in 2007, we were only “short” about 4 million. And that’s comparing everything to a period when the employment-population ratio was at about its all-time max due to secular trends in labor force participation and a really favorable business cycle. That drops to about 3 million if we take January 2001 as the baseline. All of the complaints about the weak labor market expansion were off base; complaining about a slow rate of population growth makes about as much sense as comparing Japanese and US GDP growth and concluding that the Japanese are falling ever behind.

64 endorendil September 5, 2011 at 8:08 am

The US employment-to-population ratio was fairly stable until the late seventies, following the business cycle between 55 and 58%. At the end of the seventies, it shot through the upper barrier to 60%, and after the first recession in the eighties, it never looked back. All of sudden, the ratio fluctuated between 61 and 65%. Why did the US all of a sudden start needing more of its adult population to work? Productivity hadn’t dropped, GDP didn’t jump. Why did the employment ratio make a drastic jump?

I suspect that the expansion of household and government debt that started around that time is the reason for the jump. By artificially increasing current spending at the expense of future spending, credit expansion allowed for more consumption than the economy could sustain. The idea was always that the growth of the economy would always make it easier to pay back debts later on – a dubious idea at best. The end of the story is pretty clear now: credit was too easy, and too much of it went bad. The resulting crash *should* teach us that borrowing from the future is a limited-time strategy, and our time is up.

Unfortunately, halting debt expansion entirely would collapse the economy if it were healthy, much more so now that it’s barely tottering along. Right now, the US debt is still expanding at very high rate, artificially propping up the economy. As it slows down (which it must at some point), the second dip will start. IF we are lucky, the second dip will bring down the employment-to-population to its pre-Reagan recessionary minimum of 55%. I see this as exceedingly unlikely because the system has been abused for so long, there is bound to be a large undershoot.

65 msgkings September 6, 2011 at 3:08 pm

Could the advent of women in the broad workforce be a simpler, Occam-like answer?

Sounds about right to me in terms of the time frame, around the late 70s is when it became pretty much assumed that a young woman would go to college just like her brothers and then get some kind of job after. Even if she eventually desired to leave the workforce after marriage (less and less so…), she’d go out and work until she got married.

66 Anand September 5, 2011 at 10:36 pm

Leisure? how about this auxillary fact – the explosion in overall Debt in the system has occured when the number of Employed citizens has stagnated over the last 11 years. And what happens if we lose control of the bond market.

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