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How the jobs are counted...

by afew Fri Nov 30th, 2007 at 08:51:45 AM EST

In Where the jobless go... I took another look at the vagaries of the unemployment rate, with particular application this time to the US labour market. I suggested that the employment rate, or employment/population ratio, might be a better indicator than the unemployment rate. And it seems to me that there's a growing tendency in the economic press (and in OECD communications, for example), to use the ER rather than the UR, as if they knew they were not going to be able to go on selling such a crock. What follows is a look at what goes into the employment numbers in the US, with some comparative analysis of Britain and France.

What improvement is the employment rate on the unemployment rate? Well...

The OECD gives the 2006 employment rate for the US as 72.0 %, with the UK at 72.5 %, France at 62.3 %. This is the ratio of those who have employment (salaried or self-employed) to the entire 15-64 age group.

The core group of the labour market (almost two-thirds of the working-age population), however, is the 25-54 demographic. Here the OECD says :

France 80 % UK 81.2 %US 79.8 %

There's no trace here of the ten-percent gap conceded by France in the overall figures. The explanation for the higher number of employed in the two Anglo economies has to be found in the marginal groups, 55-64 and 15-24.

The proportion of employed people in the 55-64 age-group differs considerably from one country to the other:

France 40.5 % UK 57.4 %US 61.8 %

The complicating factor here is retirement. The normal retirement age in France is 60 for both sexes, in the UK 60 for women and 65 for men, in the US at least 65 for both sexes, then, on a rising scale depending on year of birth, 66 or 67. The age group that can be readily compared is therefore 55-59 :

France 57 % UK 69 %US 69 %

There's a clear under-employment problem with the French over-55s here. Analysis from the Research and Statistics division of the Labour Ministry (DARES) counts 12.7 % of the age-group concerned by two types of measure: early retirement and exemption from job-seeking. The twelve-point gap with the UK and US is there. Early retirement programmes were rolled out mostly in the '80s and '90s then phased out, but they have been replaced by job-seeking exemptions for the over-55s. What was meant to ease the pain of lay-offs by letting older workers (who agreed) go, has become systematic and means French employers rarely hire the over-50s any more (qualification and experience cost more, of course...). Normal retirement at 60, for many years a claim of organised labour and the political left, also plainly reduces the French employment rate calculated on the OECD's standardised 15-64 working-age population.

American attitudes to retirement are different. Not only is the "normal" age of retirement 65-66-67, there are even one million over-75s in employment. The employment rate of the over-65s is 14.6%. It's hardly surprising that the employment rate of the 55-64 group is high (61%).

A BLS study analyses "bridge jobs", often part-time work that comes between the end of the career job and full retirement. These are more common at the top of the earnings scale, and at the bottom. And this of course underscores the ambiguity of late retirement: some may welcome it because they are doing highly-skilled work in which they may have acquired considerable expertise and earn well, while others, because their earnings are low and retirement prospects shaky, may be more or less forced to go on working in order to survive.

At the other end of the labour market, in the 15-24 group, the employment rates are:

France 25.3 % UK 57.3 %US 54.2 %

The gap is surprising: US and UK rates are double that of France. In all three countries, this demographic weighs 18 to 19 % of the 15-64 population, so the effect of such a wide gap on the total employment rate is not negligible.

(Now for a technical nitpick: the OECD puts together comparative labour statistics that include European countries and the US. It does so on the basis of a standard working-age population from 15-64. As we have seen, that doesn't cater for differences in retirement age. Neither does it cater for differences in youth statistics. Both the US and the UK start their labour statistics at age 16. France, along with a number of other countries, starts at 15. We could go into a digression here about why this is silly (when fifteen-year-olds are legally obliged to be at school), the point here is its statistical effect given that OECD makes no allowance for it.

The population group 15-19 quoted in the OECD stats is taken directly from national labour force surveys; it covers the 16-19 population for the US and the UK, and the 15-19 population for France. Fifteen-year-olds in France are 98 % in school and not in the labour force. Counting in this cohort therefore has no effect on the unemployment rate, which is an intra-labour force ratio. However, by increasing the denominator (working-age population) in the calculation of the employment rate, while not increasing the numerator (employment), it reduces the rate. By a rough reckoning, stripping out the 15-year-old cohort from the French numbers adds three full points to the employment rate.

This does not prevent the rate from remaining low... But one wonders why the OECD doesn't do this as a matter of course?)

Total population in this group (16-24) in the US in 2006 was 37 million, and 45 % of these were not in school. Among those Not In School, the employment rate was 72.7 %.

20.8 m were students, in high school (10.3 m) and college (10.5 m, only 1.6 m of them part-time students). In this group, the larger of the two, the employment rate is 40 %. So, of those in education, 60 % don't have jobs, 40 % do. Of those jobs, 74 % are part-time.

The profile is similar in the UK : around 72 % employment among those not in full-time education, 36 % employment for those who are in full-time education, but with this difference, that only around 37 % of the 16-24 age group are in full-time education. By my calculations (based on data from Eurostat, EU Labour Force Survey), almost all student jobs are part-time.

In France, however, two-thirds of this age group are in education. Only 13 % of those in education have a job, and that includes apprentices for 8 of those 13 %. Student part-time jobs cover only 5 % of those in education.

I calculate that the proportion of student part-time jobs in total 16-24 employment is:

France 10 % UK 25 %US 30 %

One can argue about the reasons for this difference. There's an historical cultural element in the US and UK that sees students (including secondary-school) as quite naturally having a job on the side, but this is much less true of France. The greater and increasing privatisation of higher education in the US and the UK undoubtedly also exerts greater pressure on students to find money to get through their studies. Is it in order to express a pious wish that full-time students might be just that, full-time students, or is it too, like, passé?

The other point is the rate of participation in education among the 16-24 group: about 66 % for France compared to 55 % for the US and 37 % for the UK. In a society in which it is not axiomatic that a student should have a job, this places a low bound on the 16-24 employment rate. One may argue that higher education here serves to hide youth unemployment. Indeed it's often said that French youth hangs around in the education system for years because no jobs are available. However, the heavy student enrolment in France is in the 16-19 segment, and the OECD's Education at a Glance 2005 gives the percentage of 20-29-year-olds enrolled in education as 20 % for France, 29 % for the UK, 23 % for the US, which would appear to indicate that young people prolong their enrolment more in the latter two countries than in France.

In statistical terms, what influence do student part-time jobs have on the employment rate?

16-24 age group corrected (my calculations) for student part-time:

France 25.8 % UK 43 %US 38 %

16-54 (total working-age population) corrected (my calculations) for student part-time:

France 63.6 % UK 70 %US 68 %

The ten-point gap in the OECD rates has not entirely disappeared, but the numbers are much closer.

And -- to go back on a point that has been made before on ET -- the 2005 unemployment/population ratio (not the unemployment rate, but the percentage of job-seekers in the total population) for the 15-24 group is:

France 8.6 % UK 9 %US 6.2 %

Worth remembering when you're told that practically one in four French youngsters is looking for a job.

Third and final part to follow.

The main point is how small, marginal jobs can influence the employment rate. But there are probably plenty of flaws in my reasoning. Fire away.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 30th, 2007 at 08:59:07 AM EST
great stuff and great reading! Thanks. I have a question though and this might blow the complexity of this diary completely out of proportion - could we have another country as comparison? (Only if this is not to much work,  really)
For me that might further underline one of the findings (for me at least) that unemployment figures are not really comparable from country to country, as there are so many factors that have to be considered (University fees, f.e - aprentiship scemes, etc...)


It would also be interesting to see, if some mechanism, data gathering formula could be developed that takes all these factors into account?

by PeWi on Fri Nov 30th, 2007 at 09:10:03 AM EST
We could bring in other countries. There are two sources of international "comparative" data, the OECD and Eurostat's EU Labour Force Survey. Only the OECD includes the US.

In order to dig around as I have done (finding part-time student jobs, for example, stats on which are not always readily available), you need to use the national statistical agencies and ministry stats (education for example), as well as discussion in articles, reports, surveys, etc. I can only do that with any degree of efficiency in English and French. So the project would have to become collective..?

As to whether some killer algorithm could take all the complexities into account and come up with perfectly comparable measures... Well, aren't economists always trying to do this kind of thing and failing?

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 30th, 2007 at 09:32:39 AM EST
[ Parent ]
... speaking, suggesting Canada, Belgium, Australia and New Zealand as candidates.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Dec 1st, 2007 at 10:58:04 AM EST
[ Parent ]
Just a thought: what about a Nordic 'average' for comparison?  

Norwegian government statistics are available in English...guess the same goes for the other Nordic countries.

by Solveig (link2ageataol.com) on Sat Dec 1st, 2007 at 12:39:26 PM EST
[ Parent ]
... is a different species of the same concern I had in my head about Australia when I wrote the above ... which is the primary non-renewable resource exports and what role that plays in the economy in current conditions ... which might argue for Sweden or New Zealand.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Dec 1st, 2007 at 03:42:32 PM EST
[ Parent ]
Not sure I understand what you mean here...?
by Solveig (link2ageataol.com) on Sat Dec 1st, 2007 at 05:38:14 PM EST
[ Parent ]
Australia has been going through a commodity export boom, and while I presume Norway's volume of oil exports are declining, that would be buffered to a certain extent by rising crude oil producers ...

... and I'd guess that even among high income countries, primary resource exporters seem likely to have a distinctive set of employment challenges and opportunities. They certainly do among low-income nations.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Dec 1st, 2007 at 06:42:57 PM EST
[ Parent ]
How common is it in France and England for lower-wage people to have more than one job?  I know that here in the USA it's far more common than is good for one's health and family life, and I wonder if the second jobs are counted in such a way that one would think, looking at the statistics, that the percentage of employed persons is higher than it is, when one is actually looking at fewer employed people bearing a higher work load.  (Can you make any sense of my question?  I could try to rephrase it.)

Karen in Austin

'tis strange I should be old and neither wise nor valiant. From "The Maid's Tragedy" by Beaumont & Fletcher

by Wife of Bath (kareninaustin at g mail dot com) on Fri Nov 30th, 2007 at 09:28:49 AM EST
It's a perfectly comprehensible question that I don't have the answer to at the moment. I know the US Bureau of Labor Statistics does numbers on second-job holders, and I expect I can find similar for the UK and France.

The numbers I work on are from the Labour Force Surveys (called, in America, the Current Population Survey) which are household surveys carried out on a large sample of the population. These count people, not jobs, (which the payroll statistics would do). So there shouldn't be a double count when one person holds two (or more) jobs.

The next part of this 3-part epic is about hourly rates of pay. I'll try to bring second jobs in there, since it seems like the right place.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 30th, 2007 at 09:43:24 AM EST
[ Parent ]
As far as I know, this is taken care of in definitions, usually they count people who performed at least x hours of paid labour in the previous month, or something like it. If anything, I suspect a problem on the other side: people with very part-time jobs that do appear in the statistics as employed.

Both from your comment and the and the OP, it seems some part of America's higher employment rates is in jobs that are not particularly productive, nor really wanted very much by their participants.

On the other hand, all this data massaging still leaves France with real lower employment rates for young and old people. Especially the old part must include serious numbers of people willing and able to work who can't find it. That's a poblem no matter how you measure it.

by GreatZamfir on Fri Nov 30th, 2007 at 09:46:44 AM EST
[ Parent ]
It's not a problem I'm trying to avoid. I say so clearly concerning the 55-plus group. Concerning the younger group, there's less employment because more (of the 16-19 group, especially) are in school. Meanwhile, as you say, short part-time (the rule is one hour only of paid work in the reference week) creates employment numbers and muddies the waters.

I object to the term "data massaging" however. I don't think I'm doing anything the "specialists" don't do all the time, knowing that they are creating headline statistics that will be used by different links in the info and media chain to reinforce a world view. One in which the "free market economies" have proved that their way is not only the best but inevitable.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 30th, 2007 at 10:27:17 AM EST
[ Parent ]
A very interesting discussion, but for the non economists amongst us a summary of conclusions would be useful.  My take on it is that US unemployment rates are kept artificially low (particularly with respect to France) by the exclusion of military and (the very large) US prison population from the statistics.  They are further distorted by the inclusion of age groups which in France are proportionately much more likely to be in full time education (the young) or retired (on much more generous state or privately funded) pensions.

Whether France can maintain its relatively high standard of living whilst continuing to have lower real workforce participation rates is open to question, given the demographic time bomb of an aging population, the rise in commodity prices, and the reduction in its relative advantage in technology when compared to the "tiger" economies.

However the greater investment in public education also positions France to do reasonably well as world economies seek to go up the food chain in the "knowledge economy".  

Sarkozy's election signals an awareness, on the part of the French electorate, that L'exception Francaise cannot go on indefinitely and that the "acquired rights" of some sections of the workforce are not sustainable.

However the excellent performance of "social" as well as "free" market economies in the UN HDI index indicates that countries like France also have a strong social, educational, energy, transport and commercial infrastructure to build on.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Nov 30th, 2007 at 12:22:48 PM EST
I'm not an economist (!), but I will try to summarise at the end of the third part of this survey. Yes, the exclusion of military and institutional populations works in favour of the US unemployment rate, as I argued last week with calculations based on recent figures in Where the Jobless Go... I also looked at "discouraged workers" and disability benefits as a hidden long-term unemployment stash (I looked into the same issue with regard to UK Incapacity Benefit in this diary last summer). Conclusion, it's too easy for whole groups of people to disappear from the relevant structures of labour statistics, for the unemployment rate to be taken as a solid indicator -- above all in country-to-country comparisons.

Higher participation in the labour market in France is imo desirable and feasible, particularly at the older end of the population where the retirement age at 60 could be, simply, I think, made more flexible. The problem is the now-ingrained habit of employers of not hiring anyone over fifty. It would take quite a shake-up in the "culture of enterprise" to change that.

As to maintaining a high standard of living in the face of rising commodity prices (and/or a technology gap), that's not only France's problem, and I don't believe in the neolib remedies promised by US/UK "success". Those very rising prices bring us four-square up against choices that imply, on the one hand, demand destruction, on another, innovation, and on the third (we have three hands round here), strategic programmes in renewables and energy efficiency that can provide new sources of stable jobs. There's anyway an assumption in "high standard of living" that makes me want to say, let's have sustainable living, ecologically and socially, and a great deal of that depends more on redistribution than on riding the growth tiger.

I don't entirely agree with your take on what Sarkozy's election means. He won by a clear margin but no landslide, and the demographic that gave him the victory was the over-65s. He won, in fact, by his hard-right discourse pulling over Front National voters. Right now it's a toss-up what the French think about the "necessity" for "reforms". What two of us here (Jerome a Paris and I) think of the question can be gathered here.

I think you're quite right to point out that France (not alone among "continental" countries) has a number of fairly solid advantages -- which is no reason for complacency, but, as you say, for "building on".

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 30th, 2007 at 04:38:10 PM EST
[ Parent ]
As a newcomer here I had no idea you're work has been published by Le Monde (are you John Evans?) and I now have a much better take on where you are coming from.  I think the argument you make - in your previous pieces - is sustainable and shows up the ideological nature of much of the "reform" discourse, and in particular, the degree to which it seeks to cover up the extremely unequal nature of recent growth in "free market" economies.  As the UN HDI figures indicate, the "social market" model has been at least as successful in absolute terms, and more so in relative internal terms.

That is not to say, however, that France's "dirigiste" model doesn't require some adjustment to be as successful in the future, particularly in the context of globalisation, European integration, and the seemingly widening disconnect (or class division) between state functionnaires and the majority of French citizens who do not enjoy the same level of acquired rights.

It is interesting that the very people who could be targeted by Sarkozy "reform" of retirement ages (the older age groups) also supported him disproportionately.  Perhaps many actually want the choice/option to work.  Perhaps they are just worried that their benefits will be diluted by the sheer scale of the expansion of the retired population (the I'm safely retired syndrome - but that doesn't mean I want everyone after me to share the same benefits!).

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Dec 1st, 2007 at 02:05:11 PM EST
[ Parent ]

the seemingly widening disconnect (or class division) between state functionnaires and the majority of French citizens who do not enjoy the same level of acquired rights.

You mean, the fact that functionnaires have not seen their wages increase in the past 5-6 years, as opposed to private sector workers? The fact that their wage levels, for equal education levels, are significantly below that of the private sector (and look good overall only because of the large proportion of teachers, which are better paid than the average, but much less paid than the average university graduate is).

And, of course, the way to breach the supposed 'disconnect' is to take away rights for those that have them, rather than give the same to the others?

Sarkozy got is majority with the above -65s, ie people that will never be impacted by his supposed "reforms." And he was elected because he played the Le Pen immigrant-bashing card shamelessly, with the results we see today. He was ministry of the interior for most of the past 5 years under Chirac, and he was the n°2 of these governments - he is fully responsible for what's been happening lately in the cités, and the rise of crime that he's been riding on. But nobody cares to point that out.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Dec 2nd, 2007 at 05:00:56 AM EST
[ Parent ]
Although I think the retirement at 60 rule should be loosened, I don't think for a minute that the over-65s who voted for Sarkozy were hoping to be able to go back to work! Sorry, that betrays an understanding shaped by the English-language media which systematically ignore Sarko's authoritarian hard-right populist side to concentrate on "Sarko the American" (no one in France calls him that) and the "Is he the French Thatcher? (that we know France so desperately needs to fix its dying economy)".

Similarly, the perception that the difference in treatment between public sector (20%) and private-sector (80%) workers poses a vital problem that needs to be tackled as a priority, has been fostered by the media (in French too). It's in fact a handy angle of attack for Sarko because it's easy to be confrontational about, and to get public opinion riled up about. So, he has repeated the mantra that he will not give in over the change from 37.5 years of pension contributions to 40 (private sector and most public sector). Of course, most people don't disagree. But the point for him is not to settle a problem (concerning a tiny proportion of the working population, in fact), but to establish his image as a tough reformer. He uses it to surf on.

What matters is what follows. I just watched the head of the French bosses' union, the MEDEF, Laurence Parisot, in a TV interview. It now seems established (to hear the journalists and Mme Parisot), that the 35-hour working week is going to be abolished. But hardly had Mme Parisot explained that it was much more reasonable to fix working hours in internal negotiations, enterprise by enterprise*, that she was saying that French businesses could not go on staggering under the weight of "contributions to this social system that costs so much". This is what "reform" means in the minds of these people: to do away with the "social economy" and install an Anglo-American type of neolib free-market economy.

These are the real stakes. The public-private sectors debate is a sideshow. And, though I don't see why there should not be a fairly-negotiated review of certain pension schemes (for example), I object to the way that has been whipped up into a major essential problem. And so I come down on the strikers' side.

* Given the small size of many French businesses, that means the boss will decide without negotiation.


by afew (afew(a in a circle)eurotrib_dot_com) on Sun Dec 2nd, 2007 at 07:56:38 AM EST
[ Parent ]
In many European countries, including France, if you're drawing a retirement pension you cannot legally work (as this would be benefit fraud). In the US, people "retire" and draw a private pension, and often continue working.

In the UK private pension plans have little to do with retirement: it's periodic savings that can be tapped at any time after the age of 55 as a combination of a lump sum and an annuity. There is no incompatibility with working.

So that might be an issue, too.

We have met the enemy, and he is us — Pogo

by Carrie (migeru at eurotrib dot com) on Thu Dec 6th, 2007 at 06:10:46 AM EST
[ Parent ]
Once again an excellent diary, Afew!

As you clearly put it, for the 15-24 and the 55-64, different figures mean different social choices. For example, allowing students to pursue studies without having to have a job is a choice.

However, regarding the very low employment rate for the 55-64, there are two different problems.

First, for the 55-59, besides the early retirement schemes (they still exist), these number show a total lack of employment policies for people over 50, both in the companies and the state, job-seeking exemptions being a way to avoid the problem.

Second, for the 60-64, the comparison raises the question of the economic and social affordability of retirement at 60, a subject being widely debated these days...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Fri Nov 30th, 2007 at 12:57:24 PM EST
The next part of this 3-part epic is about hourly rates of pay.

I think we will need a fourth one on productivity...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Fri Nov 30th, 2007 at 01:03:52 PM EST
Well, hours of work (weekly, annual). And productivity.

Yet more quicksands involving incompatible data, untold complications, and uncertain indicators...

I hope all this is worth a bunch of years off Purgatory.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Nov 30th, 2007 at 03:43:31 PM EST
[ Parent ]
Thanks for all the work, and the great info. I have no control over the employment policies in purgatory- or even a good source for the stats-, but I can offer a good glass of wine and my gratitude for the learning process.

Capitalism searches out the darkest corners of human potential, and mainlines them.
by geezer in Paris (risico at wanadoo(flypoop)fr) on Fri Nov 30th, 2007 at 04:59:54 PM EST
[ Parent ]
Being in good terms with the Catholic Church, I can negotiate for you some indulgences at a good price...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Sat Dec 1st, 2007 at 06:36:49 AM EST
[ Parent ]
I am looking forward to Part 3 and - maybe - part 4 as well.

paul spencer
by paul spencer (paulgspencer@gmail.com) on Fri Nov 30th, 2007 at 11:03:42 PM EST

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