The labor force participation rate is a better measure of employment health than the number that purports to show the percentage of workers unemployed. The unemployment rate gets more ink and airtime time in news reports, largely because it's a smaller number and carries a negative tone, which makes it easier to grasp, but it can be misleading. The problem is that it's based on two separate sets of numbers -- one firm and the other less so.
Consider: The labor force comprises all those aged 16 or over who are not in jail, in a hospital, in the military or in school. That's an easy, solid number to gather. The number of people actually working is also an easy number to gather, simply by collecting company payroll data.
Those out of work, however, are harder to find. The best method so is a telephone survey of households, which yields an approximation. Surveyors ask how many are in the household, how many are working, and how many are not. However, those who are not working must also stipulate that they are in fact available and actively looking for work. That survey number is then calculated as a percentage of the more firm number of the total work force. Two numbers, gathered from separate sources and by separate methods.
And there are seasonal variations. For example, the work force always rises in summer as school lets out and students look for work, and it declines again in September as students go back to school and drop out of those available and actively seeking work. Likewise, women may stop looking for work as they decide to become stay-at-home moms.
Nonetheless, they are useful numbers as long as those several variables are kept in mind. Granted, unemployment is a problem, but there are also many who are temporarily sick, are between jobs, or are college graduates looking for their first career job. With that in mind, the question then becomes, what is an "acceptable" unemployment rate?
Zero is not possible in the real world. There will always be some folks out of work for a wide number of good reasons. Meanwhile, the total number of people in the work force is a variable number, as folks enter or drop out, also for any of several rational reasons.
But for those who lose their jobs through no fault of their own, either because they were let go or because of economic downturn or technological change, being out of work is a drain on their own financial, emotional and physical resources. These are the ones who need help.
Currently, the U.S. labor force is estimated at some 155 million, and the unemployment rate is 6.7 percent, with an additional 175,000 jobs added in February. The labor force participation rate in February, according to the Bureau of Labor Statistics in the U.S. Department of Labor, was 63.0 percent in February, identical to January. It was in the same range all year, from 63.6 percent as 2013 opened, down to 62.8 percent in October. The rate was at a ten-year high of 66.4 percent in January 2007, according to BLS data, and has since declined to its low point of 62.8 percent in October 2013.
Clearly, a range of just four percentage points over ten years does not have the sizzle factor that news editor like. Instead, they can focus on the more emotionally charged negativity associated with the unemployment rate. When that number goes to double digits, it can bring back memories of severe economic recession, and when it drops to below 5 percent, headlines can tout the "Happy Days Are Here Again" song.
In addition, the BLS estimates that the growth of the labor force in America has been slowing, to an annual growth rate of 0.5 percent, and will bring an additional 8.5 million into the labor force by 2022. This is down from a growth rate of 0.7 percent in the previous ten-year period, from 2002 to 2012, when the total number of workers rose by 10.1 million.
Moreover, the increase will be entirely from population growth, the BLS said, even though the participation rate will drop to 61.6 percent by 2022.
The times --- and the people -- they are a-changing.
No comments:
Post a Comment