Labor Force Participation

Today’s Wall Street Journal brought Bureau of Labor Statistics data on labor force participation, showing it dropping (BLS press release link). The labor force is defined as those aged 16 and older; the participation rate is the percent who are actually working or seeking work. The Journal shows data from 1980 to 2012, which forms rather a bulge, with participating rates dropping below 1980 levels. I got curious and obtained a longer series from the BLS, thus going back to 1948:

The lowest numbers on this chart came in December of 1954, 58.1 percent, undoubtedly a consequence of the July 1953-May 1954 recession. The peak came in 2000 when labor force participation reached its maximum, 67.3 percent, January through April. Thus less than 10 percentage points mark the bottom and the top.

The bulge in the curve is in large part the consequence of women’s entry into the labor force. In 1948, female participation was 32.3 percent. By 2000 it had reached 59.9 and by 2010 it had declined to 58.6 percent. The pattern for men has been a gradual decline, from a rate of 85.1 percent in 1948 to 74.8 in 2000 and 71.8 percent in 2010.

The BLS’ own projections indicate an ultimate stabilization of this pattern around 60 percent in the out years, meaning by 2050 or thereabouts. Or maybe it will be a lot higher than that as the oil runs out…

Trends: Jobs and Diplomas

As the new century got going, we were engaged in preparing a statistical series at my company titled Social Trends & Indicators USA. We assembled once a week to discuss new chapters we were adding, each author reporting on his or her work. One of us startled the company by announcing (this was 2002) that, in the future, the economy would be seeking people who did not require college degrees. As you might imagine, we had a lively session. Today I want to show you some trends in labor force participation by those with no high school degrees, those with high school diplomas but without any college, and those with bachelor degrees and higher—all aged at least 25 or older. Here the three graphics:

What these graphics show is the percent of the category actually participating in the labor force, by month, from January 1992 through November 2011. In this period, the group with the least education increased its participation by 5.7 percent, those with the most lost 5.4 percent of participation, and those in the middle lost 5.9 percent. The process is slow, to be sure, but the trends...

Well, the trends are telling. Aren’t they! Ah, yes, attention to detail. By the Media, by the political establishment. This sort of thing—a slide toward the Third World—will take place unless we concentrate on the facts of economic life rather than on vague ideologies about the market. When the child decides to get a job rather than struggling with high-school algebra, he or she actually might get a job whereas, after endless years of labor, he or she, fixed up with an advanced degree, may have to settle for work as a retail clerk after all.

The data shown come from the Bureau of Labor Statistics, but I obtained them from the St. Louis Federal Reserve Bank’s FRED facility here.

“Shadow” Unemployment

In yesterday’s post I summarized how the Bureau of Labor Statistics defines unemployment. To repeat that definition, someone is considered unemployed—and, importantly, therefore also counted as a member of the civilian labor force—if he or she is out of a job, seeking work, and available to work. Here the meaning of “seeking work” is important. The individuals has to have made an effort to get a job within the last four weeks. Note that this definition does not include “is receiving unemployment benefits now”; the individual may or may not be receiving benefits.

The definition of the labor force is Labor Force = those working plus those officially unemployed.

Very well. The BLS also tallies other categories of people the bureau defines as “Not in the Labor Force, Want a Job Now.” That’s a curious definition, isn’t it? What does it mean? It is the count of all those people who (1) are not working, (2) want to work, (3) are available for work, but (4) have not sought employment in the last four weeks. Using annual averages and seasonally unadjusted raw counts, in 2010 the officially unemployed were 14.825 million and the Want-to-Work but Not-in-Labor-Force were 6.059 million. That’s a lot of people. In 2011, using a 6-month rather than a 12-month average, the same numbers were 14.101 and 6.621 million. Put another way, instead 14 million people seeking jobs this years (so far), actually nearly 21 million people want to work. In 2011, thus far, the official unemployment rate is 9.2 percent. But if we add the shadow unemployed to the labor force as well, and then calculate the shadow unemployment rate, it stands at 13.5 percent.

Those 6.6 million Want-to-Workers break down into three categories. (1) Those who are not discouraged, (2) those who are discouraged—and it is because of discouragement that they did not seek a job in the last four weeks—and finally (3) those whom BLS labels “marginally attached to the labor force.” BLS defines such people as those who did not seek employment because of interfering tasks or conditions: school or family responsibilities, ill health, or transportation problems. The biggest category is the first, those who Want to Work but are not discouraged, 4.068 million, next are the “Marginals,” 1.598 million, and the smallest category is the Discouraged, 955,000. Herewith a graphic presenting all of these categories, including the officially unemployed, for the period 2001 through 2011 (6 months).

Looking at this chart I note that throughout this period the shadow unemployment is present, in good times as well as in bad. Source of the data is this BLS facility and others tables reachable from there. The number of those Officially Unemployed has grown at a rate of 7.6 percent a year, the number of Want-to-Workers in the shadow by 3.7 percent. Within this last broad group, those not discouraged grew 2 percent a year, those discouraged by a whopping 11.5 percent, and those viewed as on the margin at 5.4 percent a year. The discouraged are a visibly larger portion of total in the graphic in the last three years.

Through the 2001-2008 period, the difference between the official and the shadow unemployment rate was right around 3.2 percent. In 2001 the official rate was 4.7 percent, the shadow rate 7.9 percent. Beginning in 2009, the difference rose to 3.8, in 2010 to 3.9, and in 2011 to 4.3 percent. In that last year, the official rate was 9.2 and the shadow rate 13.5 percent. The shadow rate is calculated by defining the civilian labor force as made up of all those employed, all those officially unemployed, and all those who want to work but are excluded from the official definition of the unemployed.

As a general rule of thumb, therefore, we can mentally adjust the official rate by adding about 3 percentage points to it. And in dreary times like the current, it’s best to add 4 points to the official rate to stay in sympathy with those in the total population who want to participate in the so-called American dream—but cannot.

Labor Force: More Musings

When the subject of male and female participation in the workforce arises, demographics tend to be ignored. Thus it turns out that participation in the workforce tends to be understated for women and overstated for men. What do I mean?

Females naturally outnumber men, but the workforce numbers are percentages of men or of women in the workforce calculated separately. In 2010, for instance, 61.99 million men were in the 25-54 age range, and 55.33 million were in the workforce; this produces the 89.3 percent male workforce participation. In that same year, the female population of the same age was 63.31 million, those in the workforce 47.61 million, and the rate was 75.2 percent participation. But if we ask, instead, how many men were in the workforce for every woman, the answer turns out that for every 10 men, 9 women labored alongside. Another way to put it is that 53.7 percent of the actual workforce at age 25-54 (102.9 million) was male, and 46.3 percent was female. In 1950 for ever 10 men at work only 4 women were required to make a go of things collectively.

What strikes me here is that that the natural (birth-based) proportion of males and females is 49 and 51 percent respectively. In 2010, both sexes were within 4.7 percent of their natural share, males 4.7 above, females 4.7 percent below. Very interesting datum! The bars are converging, folks!

Now it is said, nostalgically by some, that in the good-old-days (by which they must mean the 1950s) a man could make a living for his family all by himself. That’s obviously not statistically true if we believe Census and Bureau of Labor Statistics figures. But the 1950 proportions at least lean in that direction. We know well from history that some women always have had to fend for themselves, hence we have the word “spinster,” which once meant a woman who, without a husband, supported herself by spinning.

The by-gone ideal used to be never to labor for wages—but on your own land. But if laboring had to be done, it had best be done by the male, in dire circumstances by the woman, in the absolutely worst case by the children. From this I construct a hierarchy of economic degradation: self-supporting, wage-laboring, female-laboring, child-laboring. My bar graph therefore indicates the middle ground here somewhere, heading downward. But that’s industrialization, isn’t it?

It’s very striking that our economy absolutely demands—what with that 10:9 ratio—that women be out there working. A tiny handful, of course, are executive vice presidents, etc., but the great bulk actually labor rather than kicking ass.

It is a marvel and a mystery that in the name of wealth we’ve managed to work ourselves, pun intended, into a situation where females have no choice but to labor so that, in their ample free time, they can enjoy the great wealth of products and services that spell freedom from labor. And never mind that far too many can’t actually enjoy that wealth, because that little extra women used to go to work to earn has become necessity. And never mind that, now, now that they are working, men no longer cleave to them—so that the single-parent household, overwhelmingly female-headed, is one of the fastest-growing household categories. There were 10.6 million such households in 2007, growing at 2.1 percent a year since 1980, versus population growth in that same period of 1 percent. They held 28.8 percent of all households with children in 2007. Astounding. And, by the way, there is something we can all do. The traditional action is to take care of one’s own when the culture’s mindless axe descends.

Men, Women in the Labor Force

A recent column by David Brooks commenting on the decline in male participation in the labor force led me to look up the trends and the latest data on this ever-intriguing subject. Let me begin with a summary graphic from an article in the Monthly Labor Review, October 2006. It charts trends nicely from 1948 forward. The article is available here.

What it shows is that, indeed, the Bureau of Labor Statistics agrees with David Brooks. As a percent of the labor force, men are losing share of total jobs. In 1948 96.6 percent of all men aged 25 to 54 were working; in 2005 the number had declined to 90.5 percent. Corresponding figures for women were 35 percent in 1948 and 75.3 percent in 2005. Also intriguing is the fact that the elderly—55 and older—while having reached an all-time low in participation in 1995 (30%) were, in 2005, heading back up (37.2%) and almost as high as they had been in 1948 (43.3%). The chart also serves as a reminder that economic down-turns are a rather recurring pattern in our free-wheeling economy.

The next graphic updates this series using BLS data from here. I’m showing the numbers, at 5-year intervals, from 1950 to 2010. What I find striking here is that everybody’s participation has dropped thanks to the Great Recession. But while men went down 1.2 percent (from 90.5 to 89.3), women only lost 0.1 percent (going from 75.3 to 75.2). In the workforce, women are always retained longer than men. But the fault for this lies with men: they ought to insist that women be paid the same as men for all equivalent work! They aren’t. Therefore, good-bye!

These are not exactly demographic trends, which have the character of fate; but they do show broad social and economic trends worthy of a few minutes of contemplation. The contrast between 37 and 75 percent of women working outside the home (1948, 2010) surely has an effect on child-raising. The effect would seem minimal once women are into their late thirties, but earlier? In 2010 68.3 percent of women 20-24 and 74.7 percent of women 25-34 were working—ages when their children were toddlers up to teenagers. Does that affect society? The economic situation is also shown when we contemplate that 31.5 percent of both sexes aged 65-69 were still at work—and an amazingly high 18 percent of those aged 70-74! And there is also something here, though difficult to ferret out, that says something about the male’s conception of his role in society. But the less said, perhaps, the better…