Participants dropping out at astounding rate
Mish at Global Economic Analysis says it loud and clear as well as Mike Kimel and Ken Houghton here at Angry Bear:
I will stick with what I have said on many occasions “People are dropping out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low.”
The reason is not a recount based on the 2010 census, nor is it purely demographics, nor is it Obamanomics. The reason is severe and sustained fundamental economic weakness, coupled with existing purposely-distorted definitions of what constitutes “unemployment”.
Anyone surprised?
It would be interesting to see the age distribution of folks dropping out of the labor force. I know I dropped out in 2004 when I was able to retire early for example. Note that the baby boomers are in a range from 67 to about 50, which means that many will retire each year for a while. BTW what is the rate in Japan, I suspect its low there also. So lets see the 25-55 year old rate which eliminates a lot of the demographic effects.
oh, well, lyle
some of the poor bastards are “going to school” because they have been told that will help them get a (better) job. they too will be disappointed.
i don’t know how the drop outs are living. probably many of them are living at home, supported by those greedy geezers we hear so much about.
if it was me, i wouldn’t be so stuck on statistics. i’d be out on the streets talking to people to find out how they are doing.
Solving the ”Not in Labor Force” Mystery
“People are dropping out of the labor force at an astounding, almost unbelievable rate,”
Though the labor force may be in long, gradual decline, there was no January surge, and Mish, Rick Santelli, ZeroHedge and Rush Linmbaugh – quite predictably – have it dead wrong.
For refutation, see
Menzie Chinn
http://www.econbrowser.com/archives/2012/02/a_plea_for_aspi.html#comments
Calculated Risk
http://www.calculatedriskblog.com/2012/02/employment-not-in-labor-force-actually.html
Bonddad Stewart
http://bonddad.blogspot.com/2012/02/no-rick-santelli-and-zero-hedge-one.html
Media Matters
http://mediamatters.org/research/201202030017?newsref=www.eschatonblog.com
Krugman
http://krugman.blogs.nytimes.com/2012/02/05/lies-damned-lies-and-politics/
For anyone interested, here is tha actual report.
http://www.bls.gov/news.release/pdf/empsit.pdf
This is what you always get from the right. Data is not on their side, so they lie and distort.
JzB
apparently we have entered the post argument age of discourse. just fire links at each other.
no reason to attempt to make an argument of your own, or even summarize an argument you agree with.
no telling what could happen if you tried that.
The bogus argument has been thoroughly refuted by several highly reputabe sources. If you think there is some value in me paraphasing here, rather than simply linking – well, I chose to disagree.
Clicking a link takes very little effort.
If you think I don’t try to make an argument of my own, then I invite you to read my posts. With no chance for a real value-add on a topic that’s already been saturated, why not just link to the people who actually know what they’re talking about?
Cheers!
JzB
jazz
i think you have this backwards. YOU are trying to convince ME. So give me at least the outline of an argument before you say “ipse dixit” except in this case it’s not ipse who dixit, but a couple of dozen other opinionaters who may or may not have said something sensible. Even if i had a fast modem i wouldn’t bother to check your sources if you havn’t given me any reason to think they have said anything.
I’m an old fashioned person; I was raised to believe “an essay should contain everything within itself necessary to its own understanding.” Of course that was in the days before “cllcking a link takes very little effort.” It takes so little effort in fact that it relieves you of even thinking about your argument enough to try to make sense of it on your own.
Conservatives always get this one wrong. They think unemployment benefits stop people from accepting jobs. Actually they just keep them in the workforce instead of dropping out.
Shorter coberly – “It’s more important to make jb do what I want than to know the facts about the issue at hand.”
There are many bad ways to engage in argument, ways that are bad because they avoid looking at the facts and drawing honest conclusions. It may not be very satisfying to have evidence pointed out, rather than having the book dragged off the shelf and opened, but there is nothing dishonest or misleading about pointing the way to good analysis.
kharris
someimes when you strain to put me in a bad light you end up saying nothing at all.
as an old school teacher i was suggesting to jazz that he could be more effective in making his case if he actually made his case rather than waving his hands at his bookshelf.
jb,
Ignoring the latest problematic figure, the pace of decline in the labor force since late 2008 is the most rapid on record. By any useful standard of comparison, the decline has not been gradual.
jazz
i think that most of the time i agree with you about substantive issues. i often enjoy the way you put things.
but i don’t think you, or other posters here, realize the extent to which you fall into mere solipsism. this would be more noticeable if it weren’t for the fact that most of the commenters are doing the same thing. great fun, of course, but unlikely to change any minds.
Lord
I think you are right. But what happens to them when they drop out?
rjs,
Good quote from the article you linked:
America is not doomed to “Third World” status if the leaders of this country will begin to do what is fiscally and politically in our collective best interest. The idea of the “American Dream” is still alive. However, that dream was gradually perverted by the shift from generations of hard working individuals who strived to “build stuff” to an “entitlement generation” of “give me stuff”. The country cannot prosper with 1 out of 2 Americans on some sort of government assistance program, 87 million not in the labor force and over 46 million Americans on food stamps. This will change as necessity will ultimately dictate.”
Islam will change
Soylant Green, malbye ??
🙂
buff
the trouble with this quote is that it is in danger of putting the cart before the horse.
most workers would like to build stuff. welfare or unemployment are a real drag. where are the jobs?
you don’t create jobs by kicking people off unemployment.
i think the other thing wrong with the quote is that it uses lying statistics… that is if Social Security is counted as “government assistance.” It’s not. It’s people living on the money they saved over a lifetime of working. All the government did was provide a way to keep it safe from inflation and market losses.
JzB, as i commented at econobrowser:
the participation rate still fell 0.3% to 63.7% from the last reported; so what if it didnt really happen this month? all that means is that “those not in the labor force” has been underreported until now…
with the benchmark revision & 3 different adjustments, i cannot have confidence in anything in this report…absent the seasonal adjustment, the actual number for january non-farm payrolls was a loss of 2,689,000 jobs; knowing that the BLS confidence interval is on the order of plus or minus 100,000; seasonally adjusting that job loss to show 243,000 jobs gained leaves plenty of room for an error in the methodolgy…
coberly, i didnt cite that for its politics; just that it was one of the best attempts i’d seem to deconstruct the adjustments that gave us the collapse in participation rate…my own attempt to understand the january report is here…
rjs
thanks. i may get a chance to look at it. but really, this old man with his older computer would really appreciate a twenty five word summary.
short summary: with the seasonal adjustment incorporating the end 08 start 09 crash, the annual benchmark revision, the december to january seasonal adjustment adding nearly 3 million NFP, and the census adjustment, i couldnt make heads or tails outta this report for the life of me…
rjs
thanks indeed. i have seen a number of “reports” like that. i think it’s something they learn how to do as post docs.
As a factual matter you are absolutely wrong. The “average” shortfall for Social Security is over $100,000/recipient. For Medicare it is even more. This is why the time frame for SS solvency has gone from 2040 to 2019. This year (2012) will see the largest retirement population in history, thus adding even more pressure.
every month i check it, it increases: http://www.ssa.gov/cgi-bin/investheld.cgi
can you cite your source for the $100,000/recipient shortfall?
Steve:
Yes, I would like to see that one. While the numbers of people working have contributed to a shortfall; I do not recallanything being said of a movement from 2041 to 2019. Perhaps, you are confusing the time when payouts exceed revenue and interest? This would coincide with what you are detailing?
Jazz:
I would say the 63.7% is what it is. The BLS did not calculate correctly and there are more people in the NonInstitutional Population who are not a part of the Civilian Labor Force. (period). It is piss-poor statistical record keeping coming from the “gem” of the government bureaucracy. One can wonder why this is occurring.
buff:
Yep
looks like it’s the opposite of what lyle suggested:
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/01/Labor%20Force%20Part%20Rate.jpg
Certainly one may argue with the BLS methodology. I don’t know why they do it that way. But that is the way they have always done it. If it’s wrong now, it was wrong in 2003, 2005, and 2007.
What is indisputably wrong is ascribing a political motivation to it this year, and this year only.
JzB
Dale –
First off, solipsism is its own reward.
Second, I’ve long since given up on changing minds. Reading comments to many of Mike’s posts here, going back to 2007, reinforced idea that for me. A rational, informed person will change his opinion when he discovers that it is wrong. Or, perhaps form a new opinion on something previously not considered. Those discoveries occur through exposure to facts and data. A close-minded person will not be swayed by any argument, and might even hate non-conforming truths. BTW, this explains rampant Krugman derangement on the right.
Second and a halfth, my normal M.O. is to present facts and data, and attempt to draw logical conclusions, or at least reasonable inferences. Though startlingly short on commentary, I pretty much adhered to that protocol in my original comment, substituting a variety of learned, expert, logically thinking opinion for my own conclusions – which in turn, were based on real facts and data. Seriously, why is that a problem; especially as a one-off in a comment stream?
Third, I don’t know your history with kharris, so I’m not familiar with his attempts to put you in a bad light. But I really have to conclude that he was attempting to put me in a good light. I also conclude that there was real substance in what he said.
YMMV
Cheers!
JzB
Dale –
They become part of U6.
JzB
jazz:
And the adjustment in January was for what reason? Each month the BLS goes back ad adjusts its calculations based upon what it discovers. By then, who the hell is looking at history when it is today’ headlines?
Your last sentence can and most likely rings true though. I do find it coincidental. We are going into an election period where most people beleive unemployment is better when it clearly is not. Far too many people sit in NILF.
Jazz:
Not so sure this is true. U6 is greater than 26 weeks and still looking while NILF can include people who gave up all together. Make sense?
Steve Bryant
sorry i missed this for so long. you are absolutely wrong. can’t imagine where you get your numbers from.
i have looked at this quite seriously.
jazz
you are half right.
but it’s not only irrational people who can’t change their minds. in fact you gotta watch out for the fanatics… they are MOST rational.
i wasn’t disagreeing with you on substance… i was asking you to offer substance here and now. i think it is rude to ask your readers to go on a quest through the internet to substantiate “your” argument. generally it is impossible to tell even what “you” agree with in the articles you cite.
agreeing with kharris is perilous. he is another person i usually agree with on substance when he offers substance, but he has been offering hysterical put downs of me since he thought I called him a racist. I never call anyone a racist, so he was wrong about that. but you would never catch him admitting it.
what’s fun with kharris is that he commits exactly the same faults of manners and “logic” that he accuses me of.
jazz
partly my fault. i don’t know what U6 is. but my question was how do they eat? where do they sleep?
guessing, based on run75’s comment, i would suspect that U6 is one of those numbers that satisfy statisticians and politicians and journalists while ignoring the real problem entirely.