Possible Flat Labor Force Participation Rate Growth For 2012
Yesterday one of my favorite sites, Calculated Risk, linked to the opinion of Goldman Goldman Sachs economist Sven Jari who believes the labor force participation rate could remain broadly flat at 63.7% this year. That would change the unemployment picture a lot going into the election. It would also make the Republicans squeal like a dog with his tail accidentally shut in a car door.
Today Calculated Risk gave us a better glimpse of what that would mean for unemployment:
If the January pace of payroll employment growth continues (around 250 thousand jobs per month), and the participation rate stays at 63.7%, then the unemployment rate could fall to 7.3% in December 2012. But even at a slower pace of payroll growth, the unemployment rate could be at or below 8% by the end of the year - unless the participation rate rises or the economy slows sharply.
Here comes trouble. Despite the fact that the economy has added back 1 million jobs over the last 6 months and 3 million over the last 2 years, Conservatives still smell a conspiracy theory in the way the unemployment rate has steadily dropped over that time.
Conservative readers of this site love to promote the views of folks like ZeroHedge.com and Rush Limbaugh who claim without evidence that the labor force numbers are being fudged to artificially lower the unemployment rate. Everyone knows the labor force grows at a constant rate, never shrinks due to demographics or the economic conditions, right? Clearly if BLS finds a shrinking worforce then they are lying to us!
It gets old fast watching conservatives go out of their way to promote their alternate reality. Last week conservatives all over the web jumped on the false idea that BLS January numbers purged 1.2 million people from the workforce without noticing that BLS clearly explains the change in their report. The labor force actually grew from December to January but there's no sense in letting facts get in the way of a story about fudged government statistics, is there?
Expect a mountain of outrage from these folks if the participation rate does remain flat and the unemployment rate drops faster than expected. How this all works is the right believes the economy cannot and will not improve under Kenyan Socialist Obama. Any evidence that it has improved is all based on false data promoted by the Liar in Chief to lie his way back into another four years of lies. Lies, lies, lies!
Meanwhile it's getting harder and harder for the rational members of the right to deny that the economy has improved considerably under Obama. So far I've seen three excuses for why things have improved under Obama.
First one is that it's the economy: it improves on it's own. That's correct of course in many ways, but we can also point to direct actions by President Obama that have helped get us there like the stimulus and the auto bailouts.
Two, I had a friend the other day remind me that it's only improving because the GOP Congress. This fits well with his idea that things were fine until Democrats took over in January 2007 and this lead to the recession in 2007 and 2008 financial crisis, and that it was all the GOP House during the Clinton years as well.
The third has been mocked a lot recently. It's rationales like Bob McDonnell who said it's only improving because of Republican governors, not Obama. Right. But how? McDonnell didn't really say.
The bottom line: The economy has improved, it will continue to improve under Obama. The right doesn't have to accept it but they should stop latching on to any lie that affirms their lack of faith in Obama.
Posted by Adam Ducker at February 8, 2012 12:14 PM
Adam, the whole “under Obama” thing is the problem. If you want to discuss the economics of the labor participation rate, and remove the Presidential politics layer, then here is a good write up on the subject:
Thanks for the link to a good article.
The conservative attempts to make a case about unemployment numbers is painful to watch. They want to be bears in the worst way, but they can’t even bring themselves to recognize real causes for bearishness, such as the lack of financial regulation, because the real causes undermine their wrong-headed economic philosophy. It leads them to make absurd arguments about cooked numbers, or resort to esoteric numbers they don’t understand.
The economy is improving. Obama’s policies are not responsible. It also is not a strong recovery & it is Obama policy that may have slowed and weakened the recovery.
You can point to direct actions by Obama, but they are not responsible or even highly correlated with the recovery. We should have had recovery in 2010 if those things were working and it should be a robust economy by now.
As to the statistical quirk - that would be exactly what it is. It isn’t a good thing when rates remain/become artificially low because so many people too discouraged to look for work.
It is true that Republicans will question the numbers. You are counting on people being too innumerate and ignorant about the numbers not to be fooled by them.
C&J: “It isn’t a good thing when rates remain/become artificially low because so many people too discouraged to look for work.”
The continued effort by the right to say unemployment is only dropping because of discouraged workers leaving the workforce denies the fact that U5 (Unemployed + Marginally Attached) has gone from 11.4% to 9.9% at the same time that U3 has gone from 10.0% to 8.3%.
“You are counting on people being too innumerate and ignorant about the numbers not to be fooled by them.”
No, I just want them to speak truth about it instead of rehashing every lie they hear the right wing media says that is unfavorable to Obama and the recovery.
You write: “It also is not a strong recovery & it is Obama policy that may have slowed and weakened the recovery.”
As of right now, it’s a recovery similar to the recovery between the first and second Bush recessions. Job recovery is just now kicking in. If non-farm payrolls stay at 250,000 or higher, it will become a strong, self-sustaining recovery.
Due to the ongoing debacle in the housing markets, construction and real estate will not be adding to the recovery for a long time. I originally estimated 2017 or 2018, and that still seems plausible. About a quarter of all homeowners are underwater. This means debt will not be available to fuel recovery. During the recovery period between the first and second Bush recessions, refinancing mortgages on seemingly ever-rising real estate prices added a substantial amount to GNP.
In addition, the ongoing debts and deficits among state and local governments also continue to be a drag.
To suggest there should have been a recovery in 2010 reveals a lack of understanding of what happened to the economy. This was a credit crunch. This involved asset deflation. It was completely unlike previous recessions. About the only comparable economic downturns involving major economies that come to mind are the Lost Decade of the Japanese, and the Great Depression. In both cases, it took a very long time to overcome the downturns.
We seem to be doing pretty well in overcoming this one. A lot of difficult decisions had to be made in a short period of time. Some were good decisions. Others, perhaps not. We’ll be debating that for a long time with the benefit of hindsight.
Obama promised “change.” Instead, he changed very little as far as the economy was concerned. He played it safe and re-inflated the system in order to counteract the credit crunch and asset deflation in real estate. That meant taking on a lot of debt.
However, the debt assumed by the Obama administration was of a different character than the debt assumed under the Reagan, Bush 41, and Bush administrations. The debt assumed by the GOP administrations was voluntary. They cut taxes and increased military spending with predictable results. Obama was forced to assume debt by circumstances, in order to fight off a credit crunch and asset deflation. As the economic recovery becomes self-sustaining, it would be appropriate to raise taxes and cut defense spending, especially in light of the fact that the Iraq and Afghanistan wars are ending, and Bin Laden is dead.
Also, I notice conservatives seem to have no concrete ideas for improving the economy. In the past, they wanted to let the auto industry fail. They wanted to block everything the Obama administration attempted. They tried to destroy the economy by refusing to raise the debt ceiling.
Nice one, there.
Feel free to point out anything conservatives have that might be postiive for the economy.
re discouraged workers - that is what YOUR article says. The title is “Possible Flat Labor Force Participation Rate Growth For 2012” Since labor force participation declined because of the recession and you say that it might stay that way, you are saying that potential workers will not reenter.
A really positive thing is the boom in oil and gas. I wrote about it on the other side. Fossil fuels are saving the economy. Drill, baby, drill worked. Was that one of Obama’s slogans?
C&J: “Since labor force participation declined because of the recession and you say that it might stay that way, you are saying that potential workers will not reenter.”
On the contrary, if you read the article I linked to it says this:
[Sven Jari] argued there would be a cyclical boost to the participation rate this year from the recovering economy, but a structural decline in the participation rate due to demographics.
The folks that re-enter will just be cancelled out due to shifting demographics. This new assumption is based on updated census data about the different age groups, essentially saying that the demographic decline is stronger than expected.
I think there are a significant number of unemployed workers who will give up trying to reenter the work force because they have a very good reason to be discouraged. Discouraged because their opportunities have or are disappearing. They are called unemployed baby boomers.
It’s so funny to hear Liberals talk about the right’s unwillingness to concede any benefit from one of Obama’s policies, yet each of these accusers was far more vapid and rabid about Bush’s years in office.
How is the discourse furthered by cheerleading the opposing side?
Since you are such a fan of numbers and their accuracy -
look at these numbers.
A real look at unemployment can be found here. with a bit more fleshing out here.
You can talk and spin all you like about recovery, it’s rubbish if you look at the numbers and don’t get your ideas from shills like Jon Stewart.
You are dead wrong. Your post came through as I was linking those other articles, but baby boomers entering the workforce represent the fastest growing sector of employment.
Read those three articles I liked to that cite BLS, Bureau of Lies and Schemes, data.
Retirees are busting their asses, while younger people sit on their fat behinds for 99 goddamn weeks with their hand out, going to interviews like the ones I do with NO plan on getting a job, just doing the mandatories to keep the gravy train coming.
Your recovery is hype, and too many people believe the horse manure in the media to know any different.
Sorry Adam, that last was meant for jlw’s comment.
Yukon Jake: “You can talk and spin all you like about recovery, it’s rubbish if you look at the numbers and don’t get your ideas from shills like Jon Stewart.”
Jon Stewart? Since when does he talk economics?
My question is why Zero Hedge? You’re citing a guy who didn’t even take the time to read BLS reporting on why the workforce changed by 1.2 million workers between December and January. He hasn’t issued a retraction either. The guy can’t be trusted.
You also cite a guest at Zero Hedge that is somehow even worse than Zero Hedge, ripping on the birth/death model of jobs, as well as making a laughable statement like unemployment is 41.5% and not 8.3% because apparently if you’re not working you count as unemployed whether you want a job or not.
Zero Hedge and his group are pessimists and this works well for conservatives that need to read a constant stream of bad news about the economy that runs counter to reality so they don’t have to wrap their head around the fact that a man they call a socialist might just be good for American business or at the very least not destroying it.
It won’t matter what job numbers the Obama worshippers are touting, or if the unemployment drops to even 5%; the American voters are going to base their votes on their own economic conditions, and most Americans are suffering at the present time. Millions are out of work and lost their homes, and the price of gas and food has skyrocketed, so you do the math.
Well, I don’t worship Obama any more than conservatives worshiped Bush but I understand the right’s need to belittle the fact that Obama excites the liberal base still.
I agree there are still millions too many without jobs, many long term unemployed, and far too many working less than they’d prefer and for pay that is less than they wanted.
That being said, optimism and confidence in the economy is on the rise, not on the decline. That’s reflected partially in the way that approval of the direction of the country and President Obama’s job approval on the economy are both on the rise.
Nice hypothetical there. Have you considered that for unemployment to reach 5%, the economic situation for the average American would have to drastically improve?
You don’t get to full employment without business being much better than it is now.
But do you know what people see out there? Obama’s pushing for policies that will improve the economy, and the Republicans are out there doing things like trying to force a debt crisis, and trying to kill jobs and unions.
Who do you think people will believe is doing more to help the economy?
You can’t bust your ass if you can’t get hired, and you can’t get hired if the Baby Boomers are staying in their jobs rather than retired on gutted 401Ks, upside down mortgages, etc.
Why is it that conservatives think people enjoy being poor? Do you think folks really enjoy living in their parents house or being trapped in a dead-end job? Get real. This generation would be out there ruling the world if they could. They’re being held back by the mess that’s been made of the system.
Yukon Jake, I read the posts. All three seem to be written from a left wing perspective. They talk about fewer and lower paying jobs, and the increase in temporary jobs. They talk about the unemployment numbers including making some rather shady assumptions.
Since the Reagan Administration, the economic policies of our government have included many trade deals with other countries, especially low wage, low regulation countries. Financial and other deregulation favoring the two big to fail corporations. The facilitating of moving higher wage, higher regulated manufacturing jobs to low wage countries, including, in some, if not many incidents, in which tax payer funds were used to help the moves. Policy has been to replace those jobs with lower paying service jobs, including an increased use of temporary workers, and an open border immigration policy to bring low wage competition into the workforce and to curb the loss of population expected to come about as the baby boomers leave.
Approved policy has been to shift the tax burden from the wealthy to the middle class and to run massive deficits leading to massive debt, while rhetoricalizing the hell out of the middle class workers, turning them against one another and the poor working class.
Any person or persons who are perceived, in any way, large or small, as a threat to the economic policies being implemented by the government has been and will be attacked viciously. People like the OWS.
When Republicans tell you that regulations are costing U.S. workers jobs, that is true and will be true as long as there are third world countries that do very little regulating.
When Republicans fail to tell you that wages in America are an even bigger incentive for companies to move, they are being less than honest with you.
When Republicans fail to tell you that most of the economic policies that the government has been implementing were originated by free marketeers in the Reagan Administration and produced as Republican policy, they do so to distort the political wisdom in their favor and to implicate the Democrats, including those Democrats who participated in approving the Republican sponsored legislation to create policy changes, as the guilty party.
While a third to a half of the Democrats, and a few Republicans have fought against many of these economic policies, The Republicans have had enough Democrats on their side, including prominent ones like Clinton, Dodd, and even Obama to a large extent, to push and maintain these economic policies.
The second author makes assumptions that are obviously false.
“From the time I was 16, I worked. Everyone I knew worked.”
Perhaps if the author is 90 or older, or lives in your neck of the woods, in the backwoods of Alaska, he and everyone he knew worked from an early age. Speaking from my experience as a teenager in the 60’s, some of my high school peers, had jobs when they were 16, primarily in family owned business, and a tiny few worked unofficial jobs at an even earlier age, but the majority of my peers did not have jobs till after they had graduated from H.S.
IMO, going back in time from the 60’s, more teenagers worked, while going forward in time, fewer are working. It looks like in the future, teenagers will, by necessity have to go to work. The market is making a stand and declaring that the great big American middle class good times are over and it must, like some great lumbering dinosaur, have it’s extinction event. All the dinosaur’s didn’t die out, some became little birds.
The goal of the Republicans today is to use their rhetoric to turn the middle class workers against eachother and thus help in the job of significantly reducing the size of the middle class. Some of them are even pretending to be populists or progressives.
Example: Good Americans, patriotic Americans support the right wing and the Republicans, including their policies, whether they agree with all of the policies or not. Bad Americans, unpatriotic Americans do not.
When the Democratic party’s support for working class Americans has become weakened, there is no succor to be had for workers, other than low wage right to work, by turning to the Republican party.
“But the facts prove that old timers are so desperate for cash they have dramatically increased their participation in the workforce.”
What facts? The author presented no facts to back that statement up.
It is true that many older Americans have delayed retirement because of the recession.
It is true that some laid off baby boomers have found employment.
It is true that a significant number of those laid off baby boomers are swelling the S.S. disability rolls.
It is true that many of the laid off babyboomers that have not qualified for disability payments or have not found work are desperate or getting that way.
The stock market serves as a leading indicator for the economy. Today the NASDAQ hit an 11 year high, and the DJIA a four year high. The DJIA could easily reach an all-time high by November.
Good luck with that.
If the Republicans were smart, they’d be analysing the improvement to see if there are weaknesses. Say, as in the case of Bush’s employment recovery, an excessive reliance on the financial sector or a serious economic imbalance being made worse, like the housing bubble.
But no, they’re relying on the usual flat denial BS. I mean, you have Sean Hannity saying Obama didn’t even mean to catch Bin Laden. I mean, there’s keeping the rivals honest, and then there’s basically lying your rear end off. The Republicans aren’t even trying to be honest, they just want people in their party to believe Obama’s a Democratic version of Bush so Republican judgment is no longer questioned.
The unemployment figures are good news but but lets not fall for the “bigotry of ow expectations”. This is a tepid recovery at best. At this rate it will take 7 years of high unemployment to get back to where we were. Part of this is indeed BO fault but not for the reasons C7J claim. The stimulus should have been much bigger and designed more toward job creation rather than tax cuts. As it was it helped a cushion the fall but did not mend the patient. We do not know the political limits he had to deal with etc. but he should have tried.Now with the backward Republican House blocking every attempt to improve the economy for working people ,even pushing policies to make things worse, it is a wonder we even have this much progress.
“Drill baby drill” was not an Obama slogan. What he did say was that oil and gas should start using the oil leases they already had instead of of drilling in wilderness areas.Seems they took him up on that.
You are deluded if you think more than half of the “unemployed” are actually seeking employment. But you don’t actually give a crap, because you know that as long as government keeps the gravy train coming, you will keep people voting for more gravy (voting democrat) because it is IMMENSELY easier to vote for hand-outs than it is to vote for personal responsibility.
As to the baby boomer staying in their jobs, that was in response to jlw’s post that the boomers were leaving the workforce en masse. You can’t have it both ways. Unemployment is either increasing as the baby boomers are leaving (jlw’s faulty assertion) or it isn’t. The latter is the truth according to BLS data - I’m not gonna screw with the html again, read back a few posts for the link.
For those of you who don’t know, Zerohedge is not a personal blog of interesting information. It is a repository of articles written by TONS of sources, but the litmus test applied by the site’s proprietor (monikered Tyler Durden from Fight Club) is “does it base it’s conclusion of verifiably published numbers.” Almost every post (unless it’s strictly for humor - like the post with Rick Perry deep-throating a weiner - ROFL) has a chart and a reference.
It is not a political blog, it is a financial data blog and the VAST majority of people who regularly post consider the Right and Left to be opposite wings of the same rotten bird carcass.
WB might add 2 new articles a day on average, but ZH probably averages 15 - every day like clockwork - so I would be hesitant to argue that no retraction for an inaccurate statement has never been made. And even if it wasn’t, there is a million percent more verifiable information on there compared with watchblog, so throwing the baby out with one soapsud makes about as much sense as donating your new car because the tire pressure light turned on.
The MSM is reciting the Obama’s Pied Piper BLS schtick in true Goebbel’s fashion. “Repeat a big lie often enough, and people will believe it.”
It is no more fair to call all retired people “unemployed” than it is to call anyone who hasn’t filled out a W-2, or W-9 in 2 years “voluntarily withdrawn” from the workforce.
The article asserts with data, not opinion, that real unemployment is about 23% when you calculate the number based on people who are not employed. But that number makes Obama look bad, and the media will have NONE OF THAT. So the BLS spins the numbers and changes the formulas as fast as a short order cook throws out pancakes, and all the public cares about, or has time to hear, is [x]%.
Which is exactly what you libs want, 4 more years, only THIS time, the socialist gloves will come off because THIS time, he won’t be playing for reelection, he’ll be playing for history… AGAIN.
God help us.
The best estimates for unemployment during the Great Depression put it at 25%. While unemployment has been terrible during this recession, I don’t think even the most pessimistic person would put it at a level close to the Great Depression. I’m not minimizing the severity of what we’ve seen. Just putting it into a realistic perspective.
Furthermore, every debt and equity market in the United States and the entire world apparently accepts the BLS numbers and makes multi billion dollar decisions on the basis. The good news of the latest unemployment numbers has been treated domestically and worldwide as good news. Period. The financial incentive to know the most accurate information possible is tremendous.
Yesterday, the DJIA hit a four year high, and the NASDAQ hit an 11 year high.
Reality does not seem to share your bias.
The markets have been “detached from reality” for quite some time. I could link you to literally HUNDREDS of examples where there was a historical correlation between supply and demand, or inflation and value, and in the past 2 years all correllations are gone. It is a giant emotional cauldron whose “strings” are pulled by a very few, and everyone else tries to keep up.
Take Gold and Silver for example, there is less Silver out of the ground right now than there was in the 1700’s, you read that right, and Silver has historically (hundreds of years anyway) been approximately 1/15th to 1/20th the value of gold. With Silver now used destructively in Manufacturing Processes in almost EVERY industry, and it’s demand literally exploding worldwide - why no relationship to price? Because JP Morgan pulls the strings at the COMEX and does a massive margin hike every time it tries to correct which “shakes out” the weaker holders of physical silver.
There is almost no element in the financial sector that is not HEAVILY manipulated. 20 years ago, markets responded to normative economic principles. With the explosion of derivatives and other hedge funds, few in the markets could find their ass with both hands and fewer still can or will explain the complete lack of appropriate responses.
No one in the American media will anyway. Not that any of the bought and paid for media (left AND right) will even report almost all of what goes on on a daily basis.
As far as the NASDAQ hitting an eleven year high?
Do you realize what you’re saying? Our population and demographics have finally swollen to the point where our tech economy is tied with where it was 11 years ago? Think of what happens in a country over an entire census cycle +1.
My God, to think I didn’t bring my kazoo and party hat with me to work today to celebrate the amazing news - ROFL.
Keep whistling by the graveyard.
It’s not my own personal bias, it’s simply logic.
Yukon Jake, nearly every thing you mentioned is a product of Republican led deregulation efforts. In the free market environment, it is only natural that the big players like JP Morgan use their superior positions in the market to manipulate to their advantage. It is human nature to seek advantage. Fair trade and free trade are two separate things. IMO, you can have one or the other, but not both.
Phew! Am I glad I live in “socialist” Europe! I have just read an article which describes the rise of “Tent Cities” in several locations in the US. An accompanying video contained interviews with four children under the age of ten. Three often didn’t get a meal at home in the evening, and one admitted that her mother had caught and cooked rats on one occaission!
In western Europe there would be no excuse for this! I am unemployed and get free health care, plus enough money to sustain me and keep a roof over my head!
I just hope that the American electorate remember which party was in government at the start of this global recession, who spent billions of dollars on at least one unnecesary war, and whose policies drove up oil prices to unsustainable levels!