European Tribune - Community, Politics & Progress.

Not Such A Jobs Economy

by afew
Mon Aug 10th, 2009 at 10:09:06 AM EST

Some time back, I explained how the Unemployment Rate (the standard number trotted out by politicians and the media to describe the state of the labour market, see also here, here, and here), was calculated, and why it was not the clearest of statistics with which to compare economies or even to compare past and present "performance" within the same economy. Barry Ritholtz does some similar explaining today with regard to the slight fall in the American UR that led Barack Obama to hope that the worst of the recession was past.

Ritholtz mentions a more reliable number, the employment/population ratio, which is the percentage of people with a job out of the total population of the country. And he links to Jake (no S..!) at EconompicData, who offers this 25-year chart of the US employment/population ratio:

Reagan's first term was not over at the beginning of that graph. The ratio is lower today than it was then.

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Not Such A Jobs Economy | 20 comments (20 topical, 0 editorial, 0 hidden)

Re: Not Such A Jobs Economy (4.00 / 4)

OK, if the graph were 0-based, it would appear a lot less dramatic. But the reality of the job-creating powers of the neoliberal economy would still be clear enough.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Aug 10th, 2009 at 10:11:34 AM EST

What ya talkin bout? (none / 1)

Obviously Obama is worse than Reagan. The graph says so.

by Nomad on Mon Aug 10th, 2009 at 10:32:56 AM EST
[ Parent ]

Re: What ya talkin bout? (none / 1)

We knew that. Or at least, we will.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Aug 10th, 2009 at 10:35:14 AM EST
[ Parent ]

Re: What ya talkin bout? (4.00 / 5)

I've seen that comparison being made on dKos already - Obama as the Democratic Reagan, all fake charm, idealism and insouicance hiding another standard-issue corporcrat.

Admittedly even a good Democrat would have had a tough time fixing things. But he hasn't shown any interest in following through on his core election promises.

This is not good, because the natural outcome will be a tidal wave of disillusion and apathy among former supporters, while the rabid right has time to regroup and field a realistic challenge from someone who isn't just a bit of a cynical pragmatist, but is actively insane.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Aug 10th, 2009 at 10:51:46 AM EST
[ Parent ]

Re: What ya talkin bout? (none / 0)

...while the rabid right has time to regroup and field a realistic challenge from someone who isn't just a bit of a cynical pragmatist, but is actively insane.

and yet presentable and appealing.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Mon Aug 10th, 2009 at 08:18:00 PM EST
[ Parent ]

Re: Not Such A Jobs Economy (4.00 / 4)

See this (hat tip to Bernard):

Mish's Global Economic Trend Analysis: Dismal Unemployment Situation In Chart Form

I have been following a number of unemployment charts showing just how bad the current recession is. Click on any chart to see a sharper image.

and:
Mish's Global Economic Trend Analysis: Jobs Contract 19th Straight Month; Unemployment Rate Inches Lower to 9.4%

However, much of the "improvement" in the numbers today are as a result of the participation rate falling by .2%. In other words, the BLS stopped counting.

also:
Mish's Global Economic Trend Analysis: US Payrolls Less Than Meets The Eye

Taking one time auto sector anomalies and manipulation of the participation rate into consideration, today's job report was much weaker than looks at first glance.

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char

by Melanchthon on Mon Aug 10th, 2009 at 01:01:58 PM EST

Re: Not Such A Jobs Economy (4.00 / 2)

Yes, I'd also noticed that net private sector job creation over ten years was nil.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Aug 10th, 2009 at 04:12:09 PM EST
[ Parent ]

Re: Not Such A Jobs Economy (none / 1)

Not only is most of the graph missing it's been squeezed to boot.

Exhibit number in the quad-trillions of How to Lie With Statistics.

No one could have predicted

by ATinNM on Mon Aug 10th, 2009 at 04:38:32 PM EST

Re: Not Such A Jobs Economy (none / 0)

Come again?

It's over-dramatised, but according to you it lies? Let's hear the truth, then.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Aug 10th, 2009 at 04:43:33 PM EST
[ Parent ]

Re: Not Such A Jobs Economy (none / 1)

It lies by presentation or, as you put it, "It's over-dramatised."

As I said before, most of the graph is missing. If the computed ratio were presented visually accurate you'd see a predominately flat line with barely, visually, detectable squiggles.

The graph, visually, presents huge swings in something that, in fact, barely moves.

And we don't know - since the graph doesn't tell us (surprise, SUR-prise!) - the MOE. Therefore, those swings may be entirely an artifact of mis-measurement of the data in some way.

Nice Gee-Whiz graph, though.

No one could have predicted

by ATinNM on Tue Aug 11th, 2009 at 12:53:11 PM EST
[ Parent ]

Re: Not Such A Jobs Economy (none / 1)

darn it all ...

"in fact" s/b "by their own data"

No one could have predicted

by ATinNM on Tue Aug 11th, 2009 at 01:01:45 PM EST
[ Parent ]

Re: Not Such A Jobs Economy (none / 0)

It depends on what information you want to extract from the data.

If there is an (un)employment rate at which wage pressure changes from being upwards to being downwards, then plotting it around that line would be a relevant scaling.

There probably is. And it's for damn sure it's not at 50 % employment, so including the origin would not necessarily be the most relevant scaling.

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Aug 11th, 2009 at 01:34:01 PM EST
[ Parent ]

Re: Not Such A Jobs Economy (none / 0)

afew:

if the graph were 0-based, it would appear a lot less dramatic

In other words, I realised it should look like this:

But the point was not in the ups and downs, it was in showing that the percentage of the population in employment is the same as (in fact) 30 years ago. Job creation in the neolib economy has just managed to keep up with population increase.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Aug 11th, 2009 at 01:55:38 PM EST
[ Parent ]

Re: Not Such A Jobs Economy (4.00 / 3)

It's no lie. It just shows that the employment to population ratio is back to the 80s level.

Here is a longer view:

In my opinion, the main reason of the growth in employment to population ratio starting in the mid-80s is the following: to keep their living standards while their wages were stagnating, a great number of US households had to shift to two persons working, hence an important increase in womens' participation in the labour force.

Furthermore, I am pretty sure we would find that people started to retire later during the same period for the same reasons.

Given the fact that the current situation shows a decrease in wages, going back to the 80s' level of employment to population ratio is not a very good thing...

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char

by Melanchthon on Mon Aug 10th, 2009 at 06:32:32 PM EST
[ Parent ]

Re: Not Such A Jobs Economy (none / 1)

shame theres not the five years before that, that would make an interesting comparison

If you're not part of the solution, you're part of the precipitate.

by ceebs (ceebs (at) eurotrib (dot) com) on Mon Aug 10th, 2009 at 06:54:29 PM EST
[ Parent ]

Re: Not Such A Jobs Economy (4.00 / 2)

It is all interesting, and all crazy...go back a few years and you are looking at the results of Nixon's war on terror and Johnson trying to spread GunsNButter.

The only real story is "What it could have been, if only the rat bastards weren't intent on sucking all the money they felt that they could squeeze from the population as a whole."

I suppose the other story is a long list of "Brilliant ideas to suck money from the populace as a whole, including ways to progressively anesthetize them to our un-ethical, anti-social, criminal, treasonous behavior, including subchapters on 'Things we wouldn't have tried even 5 years before' and 'Those we have lost, who tried to hard, too soon.'"

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Thu Aug 13th, 2009 at 06:40:01 AM EST
[ Parent ]

Re: Not Such A Jobs Economy (4.00 / 2)

Looks like Jake from Econompic shares my view

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).

.
In a story (by afew, IIRC) about unemployment figures, I said we should calculate the employment to population ratio in full-time equivalent (i.e. taking into account the hours worked). Jake adopts the same approach, which gives an interesting result:

EconomPic: Least Hours on Record Since... Well... Ever

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.

A commenter suggests:

Now to get the real "eye popper".... multiply the last graph by the trend in wages.
That will reflect the "earning power" (hence spending power) of the population.

Jake says he will provide that tomorrow. I hope he will use the median wages.

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char

by Melanchthon on Tue Aug 11th, 2009 at 10:25:25 AM EST
[ Parent ]

Re: Not Such A Jobs Economy (none / 1)

Great. I was thinking of the latter development - how have real wages changed over the period?

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Aug 11th, 2009 at 10:46:29 AM EST
[ Parent ]

Here you are (4.00 / 2)

Jake kept his promise:

EconomPic: "Average" Real Income of the Population

Taking the previous chart and multiplying the data by the average hourly wage (I used private wages found here, but open to suggestions if there is better data) going back to 1964 and adjusting to 2009 $$ (via the CPI index), we get the following:

Interesting. Despite the spike in real hourly wages to levels last seen 30 years ago (due to a steady level of pay and deflation in recent months), average weekly wages are down to levels seen in the late 1990's (due to the decline in hours worked).

I think that the highly unequal distribution of the increase in wages over the last decades introduces a bias in the data. I suggested to use median wages.

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char

by Melanchthon on Thu Aug 13th, 2009 at 09:09:52 AM EST
[ Parent ]

Re: Not Such A Jobs Economy (none / 1)

Jesse's Café Américain

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char

by Melanchthon on Fri Aug 14th, 2009 at 01:36:37 AM EST
[ Parent ]

Not Such A Jobs Economy | 20 comments (20 topical, 0 editorial, 0 hidden)

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