In my last two blog posts, I discussed trends in labor force participation (here) and reasons why so many people are out of the labor force (here). As I noted in my most recent post, shifting demographic trends have changed the landscape of the labor force over the last decade and are likely to continue into the future – this is especially true of the oldest age cohorts. In particular, those cohorts have managed to simultaneously increase their rates of labor force participation while at the same time adding the largest number of people not in the labor force. The reason for this seeming incongruity is that population growth for this group is rapid. The population pyramid below, which is provided by the US Census Bureau, shows how the dynamics of the US population have changed through time. The pyramid, which allows you to scroll through years from 2000 to… View Full Post
As I discussed in my last blog post (here), labor force participation rates, and trends in the rates, vary greatly by age cohort. While the overall rate has generally fallen for the past 10 years, individuals in the 24 and younger age cohort have been particularly affected. Meanwhile, the rate for those aged 55 or older has generally gone in the opposite direction over the same period and hit all-time highs after the Great Recession. Individuals within the prime working age cohort of 25-54 fall somewhere between the two extremes; however, the series trend has been downward after the great recession. What explains the trends? The Bureau of Labor Statistics (BLS), using the Current Population Survey (CPS) and its Annual Social and Economic Supplement, investigated this very question (which can be found here). In that report, the BLS compared responses to surveys from 2004 and 2014. Individuals were asked to… View Full Post
Although the length of time of economic expansions and contractions are not necessarily predictive of the duration of future market cycles, it is interesting to look back at the historical performance. As measured by the National Bureau of Economic Research (NBER), the peak-to-trough contractions have averaged twelve months in the last forty-five years. The most recent recession has been commonly referred to as the Great Recession both because it was the longest contraction since the Great Depression and also due to the large drop-off in employment and economic activity. The 2008-09 contraction spanned eighteen months. The 1973-75 and 1981-82 recessions lasted sixteen months each. The Great Depression (1929-33) gripped the US economy for 4-1/2 years. Since 1970, the average expansion has averaged seventy-two months, or approximately six years. The US enjoyed ten consecutive years (March 1991 – March 2001) of uninterrupted growth in the 1990s. After Fed Chairman Volcker put… View Full Post
A data series that economists follow closely is the labor force participation rate. The labor force participation rate, which is estimated by the Bureau of Labor Statistics (BLS), is the labor force aged at least 16 years (or all appropriately aged individuals classified as employed or unemployed) as a percent of the civilian noninstitutional population aged 16 or more. Prior to the Great Recession, the US participation rate peaked at 66.4%. In other words, 66.4% of all noninstitutionalized individuals were either employed or looking for work. However, post-recession, the rate has been on a downward trajectory and has now registers 62.7%. Analysts often argue that the declining participation rate is worrisome because it may signify weakness in the economy, and specifically in the job market. The argument goes: if the economy was in a better position, an increasing proportion of the population would be either working or looking for work…. View Full Post
Although the US economy ended 2015 on somewhat shaky footing, several measures of the labor force are still improving. In particular, the data show that while there has been no upward movement in employer layoffs for several years, voluntary quits have been increasing since 2009. In fact, in December 2015, voluntary quits totaled nearly 3.1 million, which just about equals levels prior to the Great Recession. Voluntary quits are seen as a measure of labor market optimism (as labor market opportunities increase, voluntary quits increase) and an increase in the series is encouraging. Layoff and quit data are produced by the Bureau of Labor Statistics’ Job Openings and Labor Turnover Summary (JOLTS) program; the most recent data can be found here.