Vulgar Empiricism Obama V Reagan
Just compare the graphs (reminder, mainly to myself, at least with Chrome, you have to click “read more” to see the graphs)
Reagan
Obama
Overall Reagan saw a decline of 0.5% from 7.5% in January 1981 to 7.0% in September 1986, while Obama saw a decline of 1.9% from 7.8 % inJanuary 2009 to 5.9% in September 2014. Unemployment started higher (and very rapidly rising) when Obama was inaugurated and is now lower than it was at this point in Reagan’s second term.
Quick pop quiz. If US adults were polled and asked if they agreed with “The unemployment rate has declined more since Obama was inaugurated than it did from Reagan’s inauguration to September of his 6th year” what fraction would, correctly agree ?
The only Republican Presidents to reach this point since the official series began were Reagan, Eisenhower and Bush Jr. From Janaury 1953 through September 1958 the unemployment rate increased from 2.9% to 7.1%
The only one who beat Obama’s record so far is George W Bush Jr (and we remember how that presidency turned out).
Robert:
5.9% is great; but, but, PR is 62.7%. We have not see that low a PR since February, 1978. NILF is up ~300,000. It is nice to see U3 go down; but, I was hoping PR would go up at the same time 🙂
How did you get to type words next to the charts?
LFPR is down because of retirements and disability
Labor Force participation rate=Labor Force/Size of Population Cohort
Its going to keep falling for a while
axt:
No, not entirely and that seems to be the favorite meme today. In any case it does not matter. The only way Obama has a better U3 is because of a failing Civilian Lbor Force. By the way NILF is at a new record high.
I can not find the explanation for PR I had squirreled away; but, this is also a good one:
Too much emphasis on boomers?
“I generally have great faith in the abilities of government number-crunchers, but these percentages seem skewed. After all, boomers made up less than 25% of the total U.S. populace in 2012, and the age group with the highest historical work participation – 25 to 54 years – only includes a few years’ worth of boomers. How, then, could they be having such a disproportionate effect upon the labor participation rate?
Personally, I feel that the study puts too much emphasis on baby boomers’ retirement behavior, without considering how much of the falling labor rate is due to the effects of the Great Recession. The Bureau of Labor Statistics notes that, for instance, the labor participation rates of those aged 25 to 54 years decreased from 76.4% in 2002 to 70.9% in 2012 – while the rates of those aged 55 and over actually increased over the same time frame, from 61.9% to 64.5%.
Similarly, those aged 55 to 64 saw their workforce participation rate jump by 2.6 percentage points over the same decade, from 61.9% to 64.5%. Even those of traditional retirement age, 65 to 74 years, increased their participation to 26.8% from 20.4%. BLS estimates this particular segment to continue in this direction, with a projected participation rate of nearly 32% by 2022.
It seems to me that boomers have continued to work, at least in part, because of the detrimental effects of the last recession. Recent Gallup polls show that 39% of boomers plan to keep working at least until age 66, and that 68% of those aged 50 to 64 worry about having enough money to last through their retirement.
The study concluded that the depressed labor participation rate is here to stay, and no doubt, that is correct. While an aging population surely has something to do with the permanently low rates, I think that the economic maelstrom of the past six years needs to take more of the blame.” You can read the rest here: http://www.fool.com/investing/general/2014/07/27/are-baby-boomers-responsible-for-the-low-labor-for.aspx
Something else people seem to forget. the Millennial cohort is bigger than the baby boomer cohort.
Vox has a good article up which touches on the periphery of this. I noticed Calc Risk is using a 25-54 PR graph rather than what is being used by Household numbers. This too, I believe to be a mistake. You can not blame this on baby boomers leaving the Civilian Labor Force. Anyway, Vox’s article. http://www.voxeu.org/article/disappearance-routine-jobs “The who and how of disappearing routine jobs” and a comment:
“Our results also show that these changes in transition patterns cannot be attributed to changes in the demographic composition of the US economy, such as population ageing or the increase in the number of people going to college.
Instead, they reflect behavioral changes for individuals with given demographic characteristics”
Pickup reading the article after the comment above.
Wages actually fell a bit and while I blame the GOP more than the Democrats, there is nothing about the economy to crow about except the stock market. That being said we are doing better than most of the world so I guess that is a sort of good thing. Think how much better it would be if we had some government policies that were really geared toward growing the economy.
Axt113, I am skeptical that retirements and disability explain why the labor force participation rate has fallen for every age category 16-54. http://www.bls.gov/emp/ep_table_303.htm Meanwhile, the impact (on the overall participation rate) of baby boom demographics is being cushioned somewhat because the participation rate has risen in every age category 55 and above and the average retirement age has gone up. Pointing to retirements and disabilities diverts attention from the real policy challenge implied by labor participation rate statistics: people 16-55 lack job opportunities.
Why should data matter? For example, one of the favorite memes of the Right is that Obama has governed by fiat, using executive orders at a pace unmatched by any president.
From the National Archives:
Years EO’s EO/yr
Obama 5.5 183 33.27
Bush II 8 290 36.25
Clinton 8 363 45.38
Bush I 4 165 41.25
Reagan 8 380 47.50
Carter 4 319 79.75
Ford 3 168 56.00
Nixon 5 345 69.00
Oops, Mr. Obama seems to be issuing executive orders at a slower pace than his predecessors. Looking at the substance of the orders it’s also true that many of Mr. Obama’s E.O.s were made in modification of those issued by Bush II.
Facts don’t matter – impressions do, apparently.
Reading stuff like this always makes me wonder about counting that PR…
Are Uber drivers participants? Entrepreneurs? Or those “self employed” Fed-Ex drivers… or the folks who are renting out spare rooms via airbnb?
Who is really participating? Does anybody really know what time it is?
It’s probably due to all the servants the 1% are hiring. They need more help now than ever!
Anecdotal but 200,000 fewer postal jobs since 2008. A good number of those positions were lost when folks accepted early out offers, some with incentives.
I would still be working today if my job hadn’t evaporated.
I don’t know how that affects LFP but it does.
Also, North Carolina has shown a decreasing UI rate after stripping people of unemployment and reducing the remaining benefits. The figures I’ve seen show the drop is entirely due to people leaving the state to look for work elsewhere.
Am I mistaken in thinking that many of those people are not getting counted in UI numbers because they aren’t in the system in their new state? Has anyone done any work on inter-state emigration from Red states with barebones UI?
lol at the people not accepting demographics. ACCEPT IT FOOLS!!!!
They aren’t coming back. They are in retirement and their side of the employment to population is RISING.
RJR/Jamison, you represent why blogosphere doesn’t work anymore. ACCEPT REALITY. Look at poor Dwight Eisenhower when he was dealing with the worst of the 20’s/30’s baby bust. Employment to Population was barely 50%.
Vedicculture:
PR during the Eisenhower administration was hovering at 58% to 60% seasonally adjusted. Certainly, that is not 50%.
1953 59.5 59.5 59.6 59.1 58.6 58.9 58.9 58.6 58.5 58.5 58.6 58.3
1954 58.6 59.3 59.1 59.2 58.9 58.5 58.4 58.7 59.2 58.8 58.6 58.1
1955 58.6 58.4 58.5 59 58.8 58.8 59.3 59.7 59.7 59.8 59.9 60.2
1956 60.2 59.9 59.8 59.9 60.2 60.1 60.1 60 60 59.8 59.8 59.8
1957 59.5 59.9 59.8 59.5 59.5 59.8 60 59.3 59.6 59.5 59.5 59.6
1958 59.3 59.3 59.3 59.6 59.8 59.5 59.6 59.8 59.7 59.6 59.2 59.2
1959 59.3 59 59.3 59.4 59.2 59.2 59.4 59.2 59.3 59.4 59.1 59.5
1960 59.1 59.1 58.5 59.5 59.5 59.7 59.5 59.5 59.7 59.4 59.8 59.7
You still want to discuss demographics? In January 2000 PR was 67.3%. In January 2008, PR was 66.1%. In January 2014, PR was 63%. Gee, I wonder what happened? Did Wall Street crash in an almost a Depression occurrence? Did U# increase to 10%? Did people drop out of the Civilian Labor Force? Do you think maybe the largest cohort of the population the Millennials are in trouble due to not being able to work full time? PR for those 55-64 actually increased as I stated below. They can not afford to retire as TBTF thrashed their 401ks.
Veddiculture – blathering in capital letters doesn’t support a point.
In the early 50’s women hadn’t fully integrated into the labor force. It didn’t take two incomes to make a middle class lifestyle. There also were still significant numbers on the farm. Don’t confuse culture and demographics.
Yes, the Boomer generation is reaching retirement age but with the decline of defined benefit pensions, the vicissitudes of the stock market, and increasing lifespans demographics is far from being the only element of destiny.
The questions I posed have nothing to do with demographics and everything to do with policy decisions that are driving people out of the labor market.
Finally, learn some manners; if you’re going to be ignorant at least be polite.
@ run and pr and mark
Look I know you conservatives hate to accept the truth but facts are facts
“Between the first quarter of 2000 and the final quarter of 2013, the participation rate declined more than 4 percentage points. Roughly 65 percent of the decline is accounted for by retirement and disability. The increase in nonparticipation due to retirement has occurred only after around 2010, while nonparticipation due to disability has been steadily increasing over the past 13 years. Similarly, nonparticipation due to schooling has been steadily increasing and has been another major contributor to the secular decline in the participation rate since 2000.”
Disability, retirement and schooling are the reasons
http://philadelphiafed.org/research-and-data/publications/research-rap/2013/on-the-causes-of-declines-in-the-labor-force-participation-rate.pdf
I know you conservatives hate facts but there it is the majority of the decline is retirement and disability, and schooling adds even more, so take your foolishness elsewhere
axt113:
You are pushing your luck. Neither pr, mark or myself are conservative. You call me that again and your ass is out of here.
Also others including Goldman have done similar analysis and found similar results.
Disability and retirement playing the dominant causes, and with schooling being the third major reason
axt113:
Gee where do you think the second citation came from? I could care less what Goldman Sachs believes
Axt113 – “disability and retirement playing the dominant causes”
Great now let’s look a little deeper than simplistic correlations.
How many of those retirements were forced or otherwise coerced – see my example of the Postal Service?
In a tight economy, where jobs, especially meaningful jobs are hard to find, what’s the likelihood that someone with a condition that would qualify for disability might choose that path?
Your pat answer only leads to more questions, it isn’t the least bit definitive or explicative. Finding an answer that satisfies your preconceived notion and stopping there isn’t really a winning approach.
So here’s the question, are people exiting the labor force because retirement or disability is a preference? Or are those merely symptoms of a greater problem? Do we have any statistics on whether people are opting for Social Security earlier? How about if people opt for early Social Security during recessions?
I don’t know the answers to those questions but the data seems worth finding.
Your answer is too clean it lacks any sense of depth or curiosity.
@Run,
So you could care less what senior economists say, hmmm.
@Mark,
There may be some reasons adding to the retirements and disability, but those people are still extremely unlikely to ever return to the labor force, so unearthing the reasons are perhaps an academic exercise, but moot in practical terms.
axt:
I care less for what Goldman Sachs one of the perpetrators of 2008 say. Did you bother to read the links attached? Are you a prof or a student?
axt, agree that if you focus on the statistical decline in the participation rate after 2012, studies show it is largely (not entirely) caused by retirements and disability. Sometimes media reports on these studies forget to emphasize the timing because they don’t want to trivialize the findings. The big decline in the rate happened earlier. If we want to explain why the rate declined and remains so low, we shouldn’t look at the small declines after the big decline.
Act
No the answers to the why questions aren’t moot or academic, they are precisely the point if you are looking at labor participation and trying to determine if the economy is performing effectively for most people.
If retrements are purely a voluntary phenomenon that leads us to one set of conclusions and policy responses. If retirements are the result of pressure, weak job openings, and stagnant wages then we have a significantly different picture with some very serious implications for policy.
Initially you said, “This is why, case closed”. Now you’re saying, “Well maybe it isn’t why but the reasons don’t matter.”
What,mwhy,mand the underlying reasons are precisely the point of the exercise.
Quite a vigorous comment thread no. Having put up the graphs, I should participate.
I am old. I was stressing the poor perfomance under Reagan not claiming things have been OK under Obama.
On the PR debate, I agree with Mark. Yes it is accounted for by increased retirement and declared disability. However, both are endogenous and partly caused by the slack labor market. I guess one could go to GDP — aging and increased disability should cause low GDP growth. In 2007, no forecaster who was taken seriously forecast that GDP would be as low as it is now. Economic performance has been extremely terrible. The slightly anomalous series which has been merely terrible is the unemployment rate. There should be a very strong presumption that it is different because of endogenous participation.
Also always Presidents don’t have all the power — the Reagan era pain was due to Volcker crushing inflation, the Obama bleh is related to public policy due to insufficient fiscal stimulus. That is principally Congress’s job. It makes no sense to blame Obama for the fact that Congress ignored his proposed jobs plan. It makes plenty of sense to blame him for adopting “government has to tighten its belt” austerian rhetoric and for trying to negotiate a grand bargain. But neither had much affect on the participation rate, because Congress hasn’t listened to him whether he speaks sense or nonsense.
I go for things are rotten and its not Obama’s fault.
Robert:
Hi, good to see you out here. Good post by the way.
@PJR
If you read the first link I posted you’ll see they discuss that issue and point out how disability played a larger role earlier in the decade
@ RUN
did you read the link I posted, clearly you didn’t if all you focused on was Sach’s (which was the second source I noted, the first was from the Philly Fed), as for your links I did read them, and I found their reasoning quite specious, a bit too much speculation and not enough empirical analysis.
@Mark
Actually I said its unimportant because regardless of the underlying reason, once the trend has begun, its not going to relent any time soon.
Even an improving job market will not being people back from retirement or disability, they are gone from the job market for good.
In addition, the underlying factors at most accelerated an event that was already in the cards, namely the retirements (and to a lesser degree the disability), as people were nearing retirement age regardless of economic conditions.
axt:
Nonsense, most babyboomers can not afford to retire. Again, I would say look to the younger cohorts (Millennials are a bigger cohort than babyboomers) not being able to find jobs. Perhaps, we will wait till all is said and then economists will invest in scatology and tell us able it?
What Caused the Crash In the Labor Participation Rate?
A little more detailed:
Record Low Labor Participation Rate Not Due to Retirement or School
I notice your link talks nothing about disability Run, as I’ve pointed out, that’s a huge factor (especially before 2010)
http://blog.columbiamanagement.com/wp-content/uploads/2014/04/Percent-of-resident-population-e1396550921961.png
http://blog.columbiamanagement.com/wp-content/uploads/2014/04/Recent-Growth-in-Disability-e1396551115503.png
http://blog.columbiamanagement.com/wp-content/uploads/2014/04/Working-age-population-e1396551156993.png
Without accounting for all three you will not get the full picture
http://www.federalreserve.gov/pubs/feds/2014/201464/201464pap.pdf
https://blog.columbiamanagement.com/another-look-at-disability-and-participation
axt:
The issue was baby boomers causing the decrease in Participation Rate. It is too soon to make that proclamation as it will happen further out when they are too old and can “maybe” afford to retire or die. Have you looked at the BLS stats?
While Participation Rate for baby boomers will decrease, it is not the prime cause for what has been going on today. “The participation rate of those in the 55-years-and-older age group rose to 34.5 percent in 2002 and increased by another 6.0 percentage points, to 40.5 percent in 2012. This group’s rate is projected to rise further, to 41.5 percent in 2022. Among the subgroups of older workers, 55-to-64-year-olds had a participation rate that stood at 61.9 percent in 2002 and increased to 64.5 percent in 2012. BLS expects that their participation rate will increase by another 3.0 percentage points, to 67.5 percent in 2022. The next-older group, those 65 to 74 years, had a participation rate that was 20.4 percent in 2002 and expanded to 26.8 percent in 2012. This age group of older workers had the largest increase relative to all the other age groups over the decade, and their rate is expected to continue to increase, to 31.9 percent in 2022.” http://www.bls.gov/opub/mlr/2013/article/labor-force-projections-to-2022-the-labor-force-participation-rate-continues-to-fall.htm What has been instrumental is:
– “As the historical trends shown in table 3 indicate, the labor force participation rate of 16-to-24-year-olds has decreased sharply over the past couple of decades, especially since 2002. The participation rate of that age group was 63.3 percent in 2002 and decreased by 8.4 percentage points, to 54.9 percent in 2012. BLS projects that this rate will decline further, to 49.6 percent in 2022.”
– “participation rate is highest among 25-to-54-year-olds, surpassing 80 percent for the last several decades. Since 2000, however, the rate has been declining each year. The participation rate of 25-to-54-year-olds was 83.3 percent in 2002 and dropped to 81.4 percent in 2012, a decrease of nearly 2 percentage points for the most active age group of the labor force. The rate is expected to decline yet further, albeit slightly, to 81.0 percent in 2022.”
– “participation rate of those 25 to 34 years old, a subgroup of prime-age workers, also has been on a declining trend since 2000. This group had a participation rate of 83.7 percent in 2002, declining to 81.7 percent in 2012. The rate for these young entrants to the labor market is expected to decline slightly, to 81.1 percent in 2022.”
Also Run the proof is in the results, if it really is due to workers just being discouraged, then we should see an increase in the unemployment rate as job openings continue to increase and labor market conditions continue to improve (and a corresponding increase in the LFPR)
we should see more people try and return to the labor force.
So far however there is no evidence of that.
If its cyclical then there should be signs of that, if its structural as I am pointing out, then there should be no change.
So far the evidence supports the structural view.
Axt113 – Dang you sure know how to beat a dead horse.
Your last comment ignores, again, the nature of the jobs being created. Folks like me or Run may not want to take a lifetime of useful skills and put them on display at Wal-Mart or as at server at the nearest Olive Garden (that’s where the job growth is).
So far the evidence does not support your contentions but keep repeating it long enough and maybe it will come true; sort of like the inflationistas who insist inflations is right around the corner, well the next next corner, no, I meant the corner after the next corner…. ad nauseum, ad absurdium.