US economy does not cope with unemployment

[Figaro]

Hiring slowed significantly in the United States in August, as employers added only 142,000 jobs, a disappointing setback for an economic expansion that has been gaining steam for most of this year. The data came in far below the 200,000-plus jobs that many economists had expected - and that had been the norm over the past six months. The slower pace of hiring may be evidence that the economy is not quite as strong as many people have thought.
Drop in the unemployment rate may be due to the fact that 268,000 Americans stopped looking for job. So they left the ranks of the economically active population, which is counted in official unemployment statistics. The number of "missing workers" has increased in August to 5.91 million people. As a result, the level of economic activity had fallen to 62.8%, becoming the lowest level in past 3,5 decades
We should wait new immigrant wave

 

[oldfart]

Hiring slowed significantly in the United States in August, as employers added only 142,000 jobs, a disappointing setback for an economic expansion that has been gaining steam for most of this year. The data came in far below the 200,000-plus jobs that many economists had expected - and that had been the norm over the past six months. The slower pace of hiring may be evidence that the economy is not quite as strong as many people have thought.
Drop in the unemployment rate may be due to the fact that 268,000 Americans stopped looking for job. So they left the ranks of the economically active population, which is counted in official unemployment statistics. The number of "missing workers" has increased in August to 5.91 million people. As a result, the level of economic activity had fallen to 62.8%, becoming the lowest level in past 3,5 decades
We should wait new immigrant wave

OK, first the 62.8% is the labor force participation rate. A better measure is the employment to population ratio which stands at 59.0% and has fewer definitional problems and therefore is more stable.

On Sept 2, the Congressional Budget Office (CBO) issued a report on slack in the labor market. Slack in the Labor Market in 2014 - CBO I've posted my take on their analysis in another thread, but the gist is that the fall in the LFPR is this:

Labor Force Participation Rate
The labor force participation rate fell from 65.9 percent in the fourth quarter of 2007, at the beginning of the recent recession, to 62.8 percent in the second quarter of 2014.

CBO estimates that about ¾ percentage point of the decline since late 2007 represents the extent to which actual participation is below potential participation because of the contemporaneous weakness in both employment prospects and in wages. That amount is only slightly less than the effect CBO estimates for the fourth quarter of 2013, when the estimated shortfall of the actual participation rate relative to the potential participation rate was at its largest.

According to CBO’s analysis, most of the decline in the rate of labor force participation since late 2007 is attributable to two other factors: First, long-term trends, especially the aging of the population, account for about 1½ percentage points of the decline. Second, unusual aspects of the slow recovery of the labor market that led workers to become discouraged and permanently drop out of the labor force account for about ¾ percentage point of the decline.

 

[EdwardBaiamonte]

Hiring slowed significantly in the United States in August, as employers added only 142,000 jobs, a disappointing setback for an economic expansion that has been gaining steam for most of this year. The data came in far below the 200,000-plus jobs that many economists had expected - and that had been the norm over the past six months. The slower pace of hiring may be evidence that the economy is not quite as strong as many people have thought.
Drop in the unemployment rate may be due to the fact that 268,000 Americans stopped looking for job. So they left the ranks of the economically active population, which is counted in official unemployment statistics. The number of "missing workers" has increased in August to 5.91 million people. As a result, the level of economic activity had fallen to 62.8%, becoming the lowest level in past 3,5 decades
We should wait new immigrant wave

U6 unemployment stands at about 12% while it was around 8% before the recession. Obama should be impeached thanks to his lib commie Marxist anti-business economic record that has cost Americans $trillions.

 

[fbj]

still sucks that UC benefits are only 6 months

 

[pinqy]

Hiring slowed significantly in the United States in August, as employers added only 142,000 jobs, a disappointing setback for an economic expansion that has been gaining steam for most of this year. The data came in far below the 200,000-plus jobs that many economists had expected - and that had been the norm over the past six months. The slower pace of hiring may be evidence that the economy is not quite as strong as many people have thought.
Drop in the unemployment rate may be due to the fact that 268,000 Americans stopped looking for job. So they left the ranks of the economically active population, which is counted in official unemployment statistics. The number of "missing workers" has increased in August to 5.91 million people. As a result, the level of economic activity had fallen to 62.8%, becoming the lowest level in past 3,5 decades
We should wait new immigrant wave

U6 unemployment stands at about 12% while it was around 8% before the recession.

And it was 14.2% when Obama took office.

 

[ShackledNation]

Hiring slowed significantly in the United States in August, as employers added only 142,000 jobs, a disappointing setback for an economic expansion that has been gaining steam for most of this year. The data came in far below the 200,000-plus jobs that many economists had expected - and that had been the norm over the past six months. The slower pace of hiring may be evidence that the economy is not quite as strong as many people have thought.
Drop in the unemployment rate may be due to the fact that 268,000 Americans stopped looking for job. So they left the ranks of the economically active population, which is counted in official unemployment statistics. The number of "missing workers" has increased in August to 5.91 million people. As a result, the level of economic activity had fallen to 62.8%, becoming the lowest level in past 3,5 decades
We should wait new immigrant wave

That number is the labor force participation rate, not the level of economic activity.

It is also important to note that the rate has been falling since the late 90s, so to blame the fall simply on the recession is not accurate. Much of the fall is a result of more young people attending college and graduate schools than ever before. The baby boomers retiring also has an effect. But bad economic conditions are definitely playing a role as well as workers just give up--and that is an issue. I just wanted to note that much of the fall has to do with perfectly legitimate reasons as well.

 

[EdwardBaiamonte]

Hiring slowed significantly in the United States in August, as employers added only 142,000 jobs, a disappointing setback for an economic expansion that has been gaining steam for most of this year. The data came in far below the 200,000-plus jobs that many economists had expected - and that had been the norm over the past six months. The slower pace of hiring may be evidence that the economy is not quite as strong as many people have thought.
Drop in the unemployment rate may be due to the fact that 268,000 Americans stopped looking for job. So they left the ranks of the economically active population, which is counted in official unemployment statistics. The number of "missing workers" has increased in August to 5.91 million people. As a result, the level of economic activity had fallen to 62.8%, becoming the lowest level in past 3,5 decades
We should wait new immigrant wave

U6 unemployment stands at about 12% while it was around 8% before the recession.

And it was 14.2% when Obama took office.

which explains why Obama's recovery is worst since great Depression! Thats should be enough to impeach him for pure liberal stupidity!

 

[oldfart]

It is also important to note that the rate has been falling since the late 90s, so to blame the fall simply on the recession is not accurate. Much of the fall is a result of more young people attending college and graduate schools than ever before. The baby boomers retiring also has an effect. But bad economic conditions are definitely playing a role as well as workers just give up--and that is an issue. I just wanted to note that much of the fall has to do with perfectly legitimate reasons as well.

The CBO blog of September 2 cited upthread broke out the effects of recession/low growth into to permanent and recoverable parts and the amount of production gap attributed to demographic changes in the work force. [Post #2]

 

[EdwardBaiamonte]

. I just wanted to note that much of the fall has to do with perfectly legitimate reasons as well.

an anti business Marxist president is not a legitimate reason!

 

[EdwardBaiamonte]

still sucks that UC benefits are only 6 months

National Bureau of Economic Research
states with 99 weeks did worse than states with 26 weeks.
"Umemployment Benefits and Unemployment in the Great recession"
"Most of the persistent increase in unemployment during the great recession can be accounted for by the unprecidented extension of unemployment benefits eligibility"
J: Of course it does!. That is why all states require those who receive unemployment to prove they are looking for work.




Lawrence Summers:

First, government assistance increases the measure of unemployment by prompting people who are not working to claim that they are looking for work even when they are not. The work-registration requirement for welfare recipients, for example, compels people who otherwise would not be considered part of the labor force to register as if they were a part of it. This requirement effectively increases the measure of unemployed in the labor force


The second way government assistance programs contribute to long-term unemployment is by providing an incentive, and the means, not to work. Each unemployed person has a "reservation wage"—the minimum wage he or she insists on getting before accepting a job. Unemployment insurance and other social assistance programs increase that reservation wage, causing an unemployed person
to remain unemployed longer.


Unemployment insurance also extends the time a person stays off the job. Clark and I estimated that the existence of unemployment insurance almost doubles the number of unemployment spells lasting more than three months.

Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy.

Sherk quotes academic studies by Alan Krueger, the current Assistant Secretary of the Treasury for Economic Policy, and Lawrence Summers, current director of the White House's National Economic Council - both to the effect that unemployment insurance is a disincentive to seek work.

Sherk also quotes from an economics textbook by Nobel economist and liberal columnist Paul Krugman that unemployment insurance "reduces a worker's incentive to quickly find a new job."

Krugman does not hide from the statement.

"Do unemployment benefits reduce the incentive to seek work? Yes: workers receiving unemployment benefits are likely to be slightly more choosy about accepting new jobs.

 

[ShackledNation]

It is also important to note that the rate has been falling since the late 90s, so to blame the fall simply on the recession is not accurate. Much of the fall is a result of more young people attending college and graduate schools than ever before. The baby boomers retiring also has an effect. But bad economic conditions are definitely playing a role as well as workers just give up--and that is an issue. I just wanted to note that much of the fall has to do with perfectly legitimate reasons as well.

The CBO blog of September 2 cited upthread broke out the effects of recession/low growth into to permanent and recoverable parts and the amount of production gap attributed to demographic changes in the work force. [Post #2]

Exactly, and the CBO data supports what I said.

"Long-term trends, especially the aging of the population, account for about 1½ percentage points of the decline. Second, unusual aspects of the slow recovery of the labor market that led workers to become discouraged and permanently drop out of the labor force account for about ¾ percentage point of the decline."

Long term trends account for 1.5 percentage points. The slow recovery, in comparison, accounts for 0.75 percentage points. Thus, the slow recovery accounts for only 33% of the drop in the labor participation rate since 2007. When you look back to when the decline began in the late 90s, the drop is pretty much entirely due to retiring baby boomers and increases in college education.

 

[EdwardBaiamonte]

It is also important to note that the rate has been falling since the late 90s, so to blame the fall simply on the recession is not accurate. Much of the fall is a result of more young people attending college and graduate schools than ever before. The baby boomers retiring also has an effect. But bad economic conditions are definitely playing a role as well as workers just give up--and that is an issue. I just wanted to note that much of the fall has to do with perfectly legitimate reasons as well.

The CBO blog of September 2 cited upthread broke out the effects of recession/low growth into to permanent and recoverable parts and the amount of production gap attributed to demographic changes in the work force. [Post #2]

Exactly, and the CBO data supports what I said.

"Long-term trends, especially the aging of the population, account for about 1½ percentage points of the decline. Second, unusual aspects of the slow recovery of the labor market that led workers to become discouraged and permanently drop out of the labor force account for about ¾ percentage point of the decline."

Long term trends account for 1.5 percentage points. The slow recovery, in comparison, accounts for 0.75 percentage points. Thus, the slow recovery accounts for only 33% of the drop in the labor participation rate since 2007. When you look back to when the decline began in the late 90s, the drop is pretty much entirely due to retiring baby boomers and increases in college education.

U6 is 12%, it should be 8% as it was before recession and Barry's anti-business Marxism!