Looking at some long-term trends in the employment numbers

by drm on January 8, 2010

A new data point emerged in the reporting on the job figures today: the employment population ratio. The metric a fairly absolute measuring stick: What percentage of the people in the United States, of any age, are employed at anyone time.

One version of the data is presented below in a chart from Calculated Risk, showing the trend back to 1960 and highlighting periods of recession.

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A couple of comments. Human nature is most attuned to changes in velocity; our state of existence can change significantly over time, but if it happens at a gradual pace, we are less aware of it. When change happens quickly, we are highly aware, but our ability to process the change is limited by a set of primitive responses driven by fear, shock and self-protection. (Think about your different awareness of gaining weight at 1 pound a month, versus gaining 12 pounds in 1 month.)

Recessions create significant awareness of people out of work. Looking at the ratio over time, I’m struck by the fact that we’re back to the same level as in the early 1980′s, when we were just coming out of a prolonged recession. Because of the growth in our population, millions more people work today than then, but the ratio is about the same.

From 1975 to 2000, growth in the ratio was a by-product of a profound cultural change, with broad participation by women in the workforce. (I saw a report recently showing that more women than men get bachelor degrees, giving young women on balance better earning prospects than men of the same age.)

Over the past decade, there’s clearly another cultural shift that’s embedded in the numbers. Various factors contribute to the decline: a slight shift away from two-job households; an increase in the number of older people who are alive and not working; and an increase in the birth rate means there are more young people who can’t work.

The biggest change, however, is among the number of people who are 16-24 years old, with participation by 16-19 year old declining to just 35%. A higher percentage of these teens are in school — nearly 57% compared to about 42% in the late 1980′s, and a higher percentage of the teens attending schools are out of the labor market, as detailed in an analysis by WallStreetPit.com.

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  • Cy Caine

    Very interesting post Dan. With regard to the reference to more women than men getting bachelor degrees, this is a disturbing and increasingly well documented trend, one that isn't specific to the United States. I recently read a really interesting book called “Boys Adrift” by Leonard Sax. He notes that “A smaller and smaller proportion of boys are going on to college. Right now, the student body at the average university in the United States is 58 percent female, 42 percent male (with similar numbers in Canada and Australia)”. The data he cites (and it is substantial) are from the 2004 to 2006 time period, but given that this is representative of long term (50 year) trends there is no reason to think things have gotten anything but worse in the past few years.

  • http://www.cycaine.com/ Cy Caine

    Very interesting post Dan. With regard to the reference to more women than men getting bachelor degrees, this is a disturbing and increasingly well documented trend, one that isn't specific to the United States. I recently read a really interesting book called “Boys Adrift” by Leonard Sax. He notes that “A smaller and smaller proportion of boys are going on to college. Right now, the student body at the average university in the United States is 58 percent female, 42 percent male (with similar numbers in Canada and Australia)”. The data he cites (and it is substantial) are from the 2004 to 2006 time period, but given that this is representative of long term (50 year) trends there is no reason to think things have gotten anything but worse in the past few years.