Sunday, March 8, 2015

Not in Labor Force at Record High (Tell Paul Krugman)

Paul Krugman at the New York Times is complaining about "Employment Truthers". Why doesn't Krugman also mention the labor force participation rate (LFPR), instead of just the number of jobs created?

Yes, the U.S. added 295,000 jobs in February 2015 — but we also see that the number of those "not in the labor force" has also risen again during that same time — from 92.544 million in January to A NEW RECORD HIGH of 92.898 million in February — for an increase of 354,000, which exceeds the 295,000 number of jobs created.

Over 11 million more are "not in the labor force" since the Great Recession officially ended in June 2009 --- about the same number of jobs that were created during that same time. What does this mean? That 50% of new entrants are finding temp or low-paying jobs, while the other 50% are dropping out of the labor force?

And what is this nonsense? Prime Working-Age Population Growing Again (by Bill McBride on 3/08/2015) - "The prime working age population peaked in 2007, and appears to have bottomed at the end of 2012."

But according to the St. Louis Fed, the LFPR for prime-age workers peaked in January 1999 at 84.6 -- not 2007. And the LFPR for all age groups together peaked in April 2000 -- and the decline since that time might mostly be attributed to trade deals that offshored jobs.

The Atlanta Fed recently reported: "By our estimates, declining LFP in this age category accounts for about one-third of the overall decline in LFP since 2007, so 25- to 54-year-olds' decision to engage in the labor market has a big effect on the overall rate. Even with an improving economy, however, a turnaround in LFP among prime-age individuals might not occur."

Last year our new CBO (Keith Hall) claimed that "90 percent of the labor force decline for those who were in their prime working ages [25 to 54] for the entire six-year span [from 2007 to 2013] was from disability" [and] "a shocking nine out of 10 individuals of the younger group report that they exited the labor force due to a disability." (The new CBO's preposterous claims are debunked here.)

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