Monday, March 31, 2014

Economic Pictures Still Sucks - Especially If You're Young

I am going to get a little wonky in this article. If you don't want to read the details, here is the summary: Older folks (55+) are staying in the work force more, younger people (25-) are not in the work force and the net effect is that the total percent of people working has declined. You may now skip to What You Should Be Reading below

Net effect graphically:

U.S. Civilian Labor Force Participation Rate. Source

An interesting article by Ben Casselman at 538 about the declining labor force participation rate reminded me that all the happy talk about the unemployment rate is pure bunk.  He applies some modeling to conclude that of the 8 million missing jobs illustrated by our graph above, some were lost due to demographic trends and things like fewer teens. Ben's somewhat charitable assessment of the Obama recovery:
Our final tally, then, is that 2 to 4 million of our original 8 million “missing workers” might return to the labor force as the economy improves. That’s a lot of people: If all of them were considered unemployed, the unemployment rate would now stand at between 7.8 percent and 9 percent, down significantly from the worst of the recession, but high enough to suggest an economy that is still far from fully healed.
However, fellow SLOB, W.C. Varones pointed out on Twitter that Ben's explanatory model was also bunk.  The situation is actually worse.

The link is to a great article by the indomitable Zero Hedge that looks at the data underlying the top level statistics.  I downloaded my own data from the BLS to illustrate.

Here is the civilian labor force participation rate for the geezers since 2000:

U.S. Civilian Labor Force Participation Rate for age 55+. Source

And here is the same data for the youngsters (16-24).

U.S. Civilian Labor Force Participation Rate (16-24). Source

It is pretty obvious that the drop in participation rate is far great for the younger age population.  Demographic trends of the older folks retiring is pure bunk.  These statistics bode ill for the future because we aren't getting youth employed when they should be starting their working lives.  The "real" unemployment rate?  Who knows, but just based on the 8 million lost jobs, it would be 11.8%.  Even if you don't think that is a fair analysis, that represents lost production in the economy and lost income to the population as a whole.  It's a little late in the game for Obama to be blaming Bush.  And as for you millenials who keep voting for Obama and his cronies, what is wrong with you?

Late add:  You know what would really help youth unemployment? Increasing the minimum wage to further disconnect their pay from their skill levels.

What You Should Be Reading.

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