Top
Reference

US not employed rate

Summary

3 Jul 2008

The fraction of the population that is not employed is significantly greater than that counted as unemployed, and also rising significantly over the last 40 years. The 'Not employed' category includes the 'Unemployed' (requiring that one has looked actively for work in the last four weeks), the 'Marginally attached' (looking, but not necessarily in the last four weeks) and those not looking for work. Over the period 1968 to 2008, the unemployment rate for prime-age (25-54) men was cyclical around a constant background mean of about 4%; the not employed rate was cyclical as well, but against a background mean that rose steadily from about 8% in 1968 to about 13% in 2008. While some of this increase is no doubt millionaire early retirees and stay-at-home dads, the NY Times claims (without giving sources) that “Various studies have shown that … these nonemployed workers tend to be those who have been left behind by the economic changes of the last generation.”

Highlights

Entries below covered through 12 Apr 2008.

  • Not employed and not unemployed (3 Jul 2008) See 12 Apr 2008 entry for a 1968-2008 graph of the unemployment rate and the not-employed rate for prime-age (25-54) men. The not employed rate is clearly cyclical, but against a steadily rising background. Eyeball regression lines run about 8% to 13% for the not employed and a constant 4% for the unemployed. The NYT says “Various studies have shown that … these nonemployed workers tend to be those who have been left behind by the economic changes of the last generation.”
  • US unemployment background (11 Jul 2009) Most reported unemployment statistics are from the Bureau of Labor Statistics in the Department of Labor. All the BLS unemployment data are from the Current Population Survey, a monthly survey of a probability sample of approximately 60,000 households, conducted by the Bureau of the Census for the BLS. Data are collected by personal and telephone interviews. Response is voluntary, but only about 4% refuse. Roughly speaking, the BLS divides the population into the “Employed” (E), the “Unemployed” (U; must have looked for a job in the last four weeks), the “Marginally attached” (M; looking for a job but not in the last 4 weeks), those not looking for a job at all (N), and the institutionalized. The unemployment rate usually reported is U-3, including just the Unemployed (U / E + U). There is also a broader measure of unemployment, U-6, which includes the Unemployed, those working part-time for economic reasons (i.e. wanting full-time ; PTER), and the Marginally attached; these are all the people who are looking for full-time work but are unable to find it (U + PTER + M / E + U + M). There is one other statistic of interest, the “Not employed”. This includes those who are not looking for work (NLFW; so U + M + NLFW / E + U + M + NLFW). The survey questions and the definitions have changed over time. Probably the official unemployment rate has been pretty stable over time but, strictly speaking, current data is only comparable to data back to Jan 1994.

See also

Fraction of prime age men not working has risen steadily from 6% in 1968 to 13% in Jan 2008

4 Mar 2008. NYTimes.com.

http://www.nytimes.com/2008/03/05/business/05leonhardt.html?_r=1&oref=slogin

“Unemployed, and Skewing the Picture. By DAVID LEONHARDT”

“Over the last few decades, there has been an enormous increase in the number of people who … are not employed, but they also don’t fit the government’s definition of the unemployed — those who “do not have a job, have actively looked for work in the prior four weeks, and are currently available for work.” Consider this: the average unemployment rate in this decade, just above 5 percent, has been lower than in any decade since the 1960s. Yet the percentage of prime-age men (those 25 to 54 years old) who are not working has been higher than in any decade since World War II. In January, almost 13 percent of prime-age men did not hold a job, up from 11 percent in 1998, 11 percent in 1988, 9 percent in 1978 and just 6 percent in 1968. Even prime-age women, who flooded into the work force in the 1970s and 1980s, aren’t working at quite the same rate they were when this decade began. About 27 percent of them don’t hold a job today, up from 25 percent in early 2000.

There are only two possible explanations for this bizarre combination of a falling employment rate and a falling unemployment rate. The first is that there has been a big increase in the number of people not working purely by their own choice. You can think of them as the self-unemployed. They include retirees, as well as stay-at-home parents, people caring for aging parents and others doing unpaid work. … The second possible explanation — a jump in the number of people who aren’t working, who aren’t actively looking but who would, in fact, like to find a good job — is less comforting. It also appears to be the more accurate explanation. Various studies have shown that the new nonemployed are not mainly dot-com millionaires or stay-at-home dads. (Men who have dropped out of the labor force actually do less housework on average than working women, according to Harley Frazis and Jay Stewart of the Bureau of Labor Statistics.) Instead, these nonemployed workers tend to be those who have been left behind by the economic changes of the last generation. Their jobs have been replaced by technology or have gone overseas, and they can no longer find work that pays as well. West Virginia, a mining state, is a great example. It may have a record-low unemployment rate, but it has also had an enormous rise in the number of out-of-work men.”

Not employed graph 1960 to 2008

12 Apr 2008. NY Times

http://www.nytimes.com/2008/04/12/business/12charts.html

“Many More Are Jobless Than Are Unemployed. By FLOYD NORRIS”

“jobless rate … counts the proportion of people without jobs. To be sure, some of them do not want to work. Some are raising families on a spouse’s income, or are disabled, retired or independently wealthy. But others may be discouraged workers, who would take jobs if they thought any desirable positions were available. In the latest report, for March, the Labor Department reported the jobless rate — also called the “not employed rate” by some — at 13.1 percent for men in the prime age group. Only once during a post-World War II recession did the rate ever get that high. It hit 13.3 percent in June 1982, the 12th month of the brutal 1981-82 recession, and continued to rise from there.”

[Follow link to article for a graph.]

Former Intel CEO on degradation in US computer manufacturing

6 Jul 2010. Bloomberg Businessweek via

Too much offshoring endangers future innovation

Various causes

Globalization must be part of the story..

CR showed the fraction of men and women employed over time. As men went down, women went up. This surely must also be part of the story.

Recently, David Leonhardt of the NYTimes had another story, in which he mentions that part of the story is a rise in long-term disability. He links to another Times article.

The disability-focused article is by Motoko Rich.

The relevant SSA data is here.

Employment rates for US men

30 Apr 2011. Economist p11.

http://www.economist.com/node/18620710

“What's wrong with America's economy?”

“America had employment problems long before the recession, particularly for lesser-skilled men. These were caused not only by sweeping changes from technology and globalisation, which affect all countries, but also by America’s habit of locking up large numbers of young black men, which drastically diminishes their future employment prospects. America has a smaller fraction of prime-age men in work and in the labour force than any other G7 economy. Some 25% of men aged 25-54 with no college degree, 35% of high-school dropouts and almost 70% of black high-school dropouts are not working.”

http://www.economist.com/node/18618613

“Decline of the working man”

“America has a smaller share of prime-age men in the workforce (ie, in a job or seeking one) than any other G7 economy …

The main reason why fewer men are working is that sweeping structural changes in rich economies have reduced the demand for all less-skilled workers. Manufacturing has declined as a share of GDP, and productivity growth has enabled factories to produce more with fewer people. Technological advances require higher skills. For the low-skilled, low demand has meant lower wages, both relative and absolute. This in turn reduces the incentive to find a job, especially if disability payments or a working spouse provide an income.

Men have been hit harder than women by these shifts. They are likelier to work in manufacturing; women have been better represented in sectors, such as health care and education, where most job growth has taken place. Women have also done more than men to improve their academic credentials: in most rich countries they are likelier than men to go to university. …

A second explanation is that American men have let their schooling slide. Those aged between 25 and 34 are less likely to have a degree than 45- to 54-year-olds. As David Autor of MIT points out, they are also less likely to have completed college than their contemporaries in Britain, Denmark, France, Ireland, the Netherlands and Spain. In recent years America’s university graduation rates have slipped from near the top of the world league to the middle. Men are far likelier than women to drop out. Their record at school is bad too. This educational decline has a racial edge. Black and Hispanic boys are far less likely to graduate from high school than white or Asian youths. A smaller fraction starts college and a larger fraction drops out.

Poor educational performance also interacts perniciously with America’s habit of imprisoning large numbers of young black men. Harry Holzer, an economist at the Urban Institute, a think-tank, points out that one black man in three spends some time in prison; for those without a high-school diploma, the rate is two in three. As Mr Bradley’s tale illustrates, once you have been in jail, finding a job becomes far harder. Many employers, notably in health care or education, will not consider ex-offenders. Those that do often require a clean record for several years. …

Policies have created perverse incentives for both groups. The older dislocateds often try hard to be declared officially disabled, even though it can take up to three years and cost several thousand dollars in legal fees, not least because this brings access to Medicare, a government health-insurance scheme. (Many low-wage jobs do not come with health insurance.) But this is also a one-way street to permanent detachment from the workforce. In recent years the government has tried to encourage disability recipients to return to work, for instance by promising that they can stay on Medicare for several years. This scheme, says Larry Katz of Harvard University, has been “utterly ineffective”. ”