George Will: Unemployment would be 11.3% if....

DigitalDrifter

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George Will: If Work Participation Rate Was Same As 2007, Unemployment Would Be 11.3%



GEORGE WILL: The people are right, the two-thirds that think the economy is not good. The recession began in December 2007. Since then, we have added 13 more million Americans in the country and we have 1.3 million fewer jobs. We have lowered the unemployment rate largely, not entirely, but largely because work force participation rate has gone down as more and more workers have been discouraged and are no longer counted anymore because they're not looking for work. If the work force participation rate today was as high as it was when the recession began, the unemployment rate would be 11.3%. We wouldn't be calling it a poor recovery because it wouldn't be called a recovery at all.
George Will: If Work Participation Rate Was Same As 2007, Unemployment Would Be 11.3% | Video | RealClearPolitics
 

Indeependent

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That's what happens when Monster.com has ads that specify you must be currently employed to submit your resume.
Off-shoring and 3+ million business visas who will work for $5.00/hour doesn't help.
 
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DigitalDrifter

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It's unfortunate that the msm hardly reports facts like this at all. Instead, they fawn all over any employment #'s the administration comes up with.
 

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George Will: If Work Participation Rate Was Same As 2007, Unemployment Would Be 11.3%



GEORGE WILL: The people are right, the two-thirds that think the economy is not good. The recession began in December 2007. Since then, we have added 13 more million Americans in the country and we have 1.3 million fewer jobs. We have lowered the unemployment rate largely, not entirely, but largely because work force participation rate has gone down as more and more workers have been discouraged and are no longer counted anymore because they're not looking for work. If the work force participation rate today was as high as it was when the recession began, the unemployment rate would be 11.3%. We wouldn't be calling it a poor recovery because it wouldn't be called a recovery at all.
George Will: If Work Participation Rate Was Same As 2007, Unemployment Would Be 11.3% | Video | RealClearPolitics
(1) Why should the labor force participation rate be the same as it was in 2007?

(2) Is there any reason to think that the decline of the LFPR shold be attributed solely or mostly due to people who just give up looking for work?

The LFPR has been declining since about 1999.

Civilian Labor Force Participation Rate (CIVPART) - FRED - St. Louis Fed

The most obvious contributor to it's decline is the retirement of the Baby Boomer generation. You can see in the chart above when the Baby Boomers begin to enter the workforce and when they begin exit about 30 years later.

And since I'm not the only Captain Obvious that realizes this, feel free to read this article from the Bureau of Labor and Statistics on it from last month:

Labor force projections to 2022: the labor force participation rate continues to fall : Monthly Labor Review : U.S. Bureau of Labor Statistics

Unfortunately for some political partisans, the decline in the LFPR doesn't appear to be Obama's fault.
 
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Although there are millions of people that have dropped out of the Labor force which plays a major role as to why the unemployment is going down. But, at the same there are great signs which indicate the economy is doing a lot better. The progress may have a lot to do with the fact that the Federal Reserve is injecting billions of dollars in the economy in a monthly basis which is why the stock market is doing very well. We'll see what happens to the economy when they roll back their Stimulus.
 
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Papageorgio

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That's what happens when Monster.com has ads that specify you must be currently employed to submit your resume.
Off-shoring and 3+ million business visas who will work for $5.00/hour doesn't help.
That is possibly one of the dumbest statements I have seen in a long while. But its a sound bite the Dems play.
 
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DigitalDrifter

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BB's retiring is the common claim for the reduction in workforce #'s, but it goes much deeper than that.

2) The bad economy is keeping workers in school and out of the labor force. Demographics can't entirely explain of the labor force fall, however. For one, the number of Americans working or actively seeking work has actually fallen faster than demographers had predicted:




And here's another clue that this isn't just a demographic story: The participation rate for workers between ages 16 and 54 fell sharply during the recession and still hasn't recovered. Obviously retirements can't explain this:
Three reasons the U.S. labor force keeps shrinking
 

JimmieD

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BB's retiring is the common claim for the reduction in workforce #'s, but it goes much deeper than that.

2) The bad economy is keeping workers in school and out of the labor force. Demographics can't entirely explain of the labor force fall, however. For one, the number of Americans working or actively seeking work has actually fallen faster than demographers had predicted:

And here's another clue that this isn't just a demographic story: The participation rate for workers between ages 16 and 54 fell sharply during the recession and still hasn't recovered. Obviously retirements can't explain this:
Three reasons the U.S. labor force keeps shrinking
First, your article and the Boston Fed Paper referenced in the article do agree that the biggest contributor is the baby boomer retirement, so that affirms my point. It's not even controversial or really insightful either - anyone can look at the chart and see the effect of the baby boomers entering the workforce and retiring.

Does this explain 100% of the rise and decline of the LFPR - like anything else in the economy, no. You will never run a set of data and come up with an R^2 = 1. The economy is extremely enormous (global in nature in fact) and highly complex. There is no 1 single factor that will fully explain anything, much less a single factor that explains something in such a linear fashion. I'm sure that there is something to be said for #2 and #3 in the WaPo article.

The Boston Fed paper referenced by the WaPo was a good read. But the WaPo article incorrectly concluded that the "these non-inevitable dropouts might even account for the bulk of the decline." The Boston Fed paper actually said that the "state-level data indicates that the aggregate decline in prime-age LFPR since 2007 can be fully explained by the persistent shortfall in labor demand." That does not say that the decline in the LFPR is fully accounted for by non-inevitable dropouts. To conclude that, you would have to also include the retirees of the "Older Adults" category, which would end up showing what the paper also conceded and everyone else realizes - the bulk of the decline is due to baby boomer retirement.

The CBO concludes similarly that baby boomers account for most of the decline and, as of 2011, attribute policy effects to decrease the LFPR by about .9%. In contrast, the baby boomer effect will contribute to about a 3% decline over the same time frame. http://www.cbo.gov/sites/default/fi...20xx/doc12052/03-22-laborforceprojections.pdf


The Boston Fed paper also concludes something different from the WaPo article, and which the WaPo article doesn't tell us. From the WaPo article:

But the economic story is also bleak in places, particularly for older workers: Another recent paper noted that the decline in U.S. manufacturing jobs may be partly responsible for the fall in the participation rate. During the housing boom in the 2000s, many of those manufacturing workers could find jobs in the construction sector. But once housing went bust, they were left adrift, unable to find new work.
But the Boston Fed data says that the story for older adults is about what it was before the crisis,

"As shown above in Table 1, the LFPR for adults 55 to 64 years old has risen only modestly since 2007-a full percentage point lower in 2012 than the BLS had projected as of November 2007...By contrast, the LFPR for adults aged 65 years and older has risen notably over the past few years to a level in 2012.....In effect, the average LFPR for all adults 55 years and above remains roughly in line with its pre-crisis trend," (pp 17-18).

Also note that when the WaPo is showing a graph about forecasted unemployment and labor participation rates from the BLS, we must account for the variation in the forecast, ie forecast error - which the WaPo doesn't mention. The Boston Fed paper makes the same point I'm making here:

"Of course, even demographic patterns are not perfectly predictable. Table 1 shows that
the actual 5-year changes in the population shares for several broad age groups have turned out to be noticeably different from what was projected in 2007; i.e., the share of prime-age adults is a full percentage point lower than expected, while the shares for youths and for 55-to-64-year-olds are correspondingly higher" (p11)

We have to consider forecast error from the BLS before we can say if there is something indicated by the data that happened to significantly throw off their forecasts. So the WaPo just throwing up a graph of a forecasted variable and the actual variable doesn't tell us what we need. Usually economic forecasts become pretty wild and variable after you go out more than a couple of quarters. I don't know what the BLS forecast errors are currently for the LFPR (and I don't think the Boston Fed writer did either), but previous estimated errors for long periods of time have varied between –8.3% and +8.3% (http://www.stats.bls.gov/opub/mlr/2005/07/art5full.pdf, table 2). So this would at least suggest just a little bit of caution when thinking that any deviation from BLS forecasts is automatically noteworthy. It may also suggest that forecasting is useless over long periods of time. In any case, if we use previous forecast errors, or if we just say we don't know the forecast errors, then we cannot conclude as the WaPo does that " the number of Americans working or actively seeking work has actually fallen faster than demographers had predicted." Since it's within previous forecast errors for long periods of time, then it hasn't fallen more than predicted. If we don't know the forecast error, then we don't know if it's fallen more than predicted.
 
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Publius1787

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George Will: If Work Participation Rate Was Same As 2007, Unemployment Would Be 11.3%



GEORGE WILL: The people are right, the two-thirds that think the economy is not good. The recession began in December 2007. Since then, we have added 13 more million Americans in the country and we have 1.3 million fewer jobs. We have lowered the unemployment rate largely, not entirely, but largely because work force participation rate has gone down as more and more workers have been discouraged and are no longer counted anymore because they're not looking for work. If the work force participation rate today was as high as it was when the recession began, the unemployment rate would be 11.3%. We wouldn't be calling it a poor recovery because it wouldn't be called a recovery at all.
George Will: If Work Participation Rate Was Same As 2007, Unemployment Would Be 11.3% | Video | RealClearPolitics
Well, Duh. A simple visit to the BLS website will affirm this. You should visit this sit at least once a quarter. But George Will is right. The media and liberals pay attention to what is seen, not what goes unseen.
 

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Although there are millions of people that have dropped out of the Labor force which plays a major role as to why the unemployment is going down. But, at the same there are great signs which indicate the economy is doing a lot better. The progress may have a lot to do with the fact that the Federal Reserve is injecting billions of dollars in the economy in a monthly basis which is why the stock market is doing very well. We'll see what happens to the economy when they roll back their Stimulus.
I would quibble over how well the economy is doing. Let's first see how much effect the destimulus of cutting 1.3 million off unemployment benefits will have. Most macro models peg that alone at 0.8--1.3% loss of GDP growth. The Fed has been doing all of the heavy lifting, but without fiscal stimulus, I don't see any robust recovery in the next 3--5 years. In December 2008 I got incredulous responses when I predicted we would not reach 2007 real per capita GDP levels within 5 years (based on three of the big private forecasting houses). It turns out I was over-optimistic.
 

william the wie

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Yeah, we are overdue for a significant dip below trendline in equities and have been since at least 2000. when that hits it will raise UE due to negative wealth effects on consumption.
 

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George Will: If Work Participation Rate Was Same As 2007, Unemployment Would Be 11.3%



GEORGE WILL: The people are right, the two-thirds that think the economy is not good. The recession began in December 2007. Since then, we have added 13 more million Americans in the country and we have 1.3 million fewer jobs. We have lowered the unemployment rate largely, not entirely, but largely because work force participation rate has gone down as more and more workers have been discouraged and are no longer counted anymore because they're not looking for work. If the work force participation rate today was as high as it was when the recession began, the unemployment rate would be 11.3%. We wouldn't be calling it a poor recovery because it wouldn't be called a recovery at all.
George Will: If Work Participation Rate Was Same As 2007, Unemployment Would Be 11.3% | Video | RealClearPolitics
All that boils down to is "if there were more people who were unemployed then the unemployment rate would be higher." Kind of a tautology.
 

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the labor force participation rate... ...The most obvious contributor to it's decline is the retirement of the Baby Boomer generation.

--sorry, the reason this is so funny is that we've got another thread going on where the doom'n'gloomers are saying the boomers are having to forgo retirement altogether so we need more tax'n'spending to bail out the poor poor boomers! Seriously, boomer retirement has nothing to do with it. The number of jobless aged 15 to 65 used to be stable for years, but when the 110th congress began the big tax'n'spend budgets--

--the number of jobless aged 15-65 soared by over thirteen million. OK, we're down a bit w/ the 112th congress but we still got a long way to go.







boomer retirement. jeesh...
 

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George Will: If Work Participation Rate Was Same As 2007, Unemployment Would Be 11.3%



GEORGE WILL: The people are right, the two-thirds that think the economy is not good. The recession began in December 2007. Since then, we have added 13 more million Americans in the country and we have 1.3 million fewer jobs. We have lowered the unemployment rate largely, not entirely, but largely because work force participation rate has gone down as more and more workers have been discouraged and are no longer counted anymore because they're not looking for work. If the work force participation rate today was as high as it was when the recession began, the unemployment rate would be 11.3%. We wouldn't be calling it a poor recovery because it wouldn't be called a recovery at all.
George Will: If Work Participation Rate Was Same As 2007, Unemployment Would Be 11.3% | Video | RealClearPolitics
(1) Why should the labor force participation rate be the same as it was in 2007?

(2) Is there any reason to think that the decline of the LFPR shold be attributed solely or mostly due to people who just give up looking for work?

The LFPR has been declining since about 1999.

Civilian Labor Force Participation Rate (CIVPART) - FRED - St. Louis Fed

The most obvious contributor to it's decline is the retirement of the Baby Boomer generation. You can see in the chart above when the Baby Boomers begin to enter the workforce and when they begin exit about 30 years later.

And since I'm not the only Captain Obvious that realizes this, feel free to read this article from the Bureau of Labor and Statistics on it from last month:

Labor force projections to 2022: the labor force participation rate continues to fall : Monthly Labor Review : U.S. Bureau of Labor Statistics

Unfortunately for some political partisans, the decline in the LFPR doesn't appear to be Obama's fault.

Baby Boomer retirement is not the main cause of the decline in the LFPR, bub. There is no way the ratio would collapse in such a short amount of time due to demographics...especially considering how so many people over 65 cannot afford to retire. Their participation in the labor force has increased, not declined.



Apply the January 2008 participation rates to current population and this means we are missing 3.4 million post-Baby Boom workers from the labor force. These post-Boomers account for 68% of the “missing” work force.

If labor force participation was dropping only due to Baby Boomer retirement, the rate should have dropped from 66.2% in January 2008 to 64.8% today. Instead, it is 63.6%. There is certainly a good deal of room for improvement to get younger people back into the labor force. We shouldn’t simply push the problem off to being Boomer retirement or we risk ignoring a whole generation that is unemployed and flying under the radar.



Political Math » Is the Labor Force Shrinking Due to Boomer Retirement? (Not Mostly)


Math is So Hard for you pr0gs.
 
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