The Black Unemployment Rate
The Black Unemployment Rate
Josh Marshall listens to Donald Trump so we do not have to:
President Trump has been out bragging that “because of my policies” the African-American unemployment rate has dropped to its lowest level ever. This appears to be technically true. But I thought it made sense to give some context for the nonsensical nature of this claim. As you can see, the idea that this is “because of my policies” is a bit hard to square with the actual data.
Josh provides the data on the black unemployment rate from January 1972 to December 2017. This rate spiked during the Great Recession but fell dramatically during the Obama term and continued its decline. Far enough but this is a very misleading metric. While the black unemployment rate is lower than it was even in 2000, let’s note why. The black labor force participation rate was only 62.1% as of December 2017 as opposed to 66.0 percent in April 2000. A better metric would be to compare the black employment to population rate which reached 61.4% but was only 57.9% as of December 2017. One has to wonder if Trump just thinks we are stupid or if he has just incredibly low expectations.
PGL:
If you asked Trump what PR was, he would not have a clue. Then too when PR started to retreat after October/November of 2000, U3 was still the indicator and PR for most people was a huh?
Historically Black unemployment has been twice or close to twice what White unemployment was in percentages. I have not examined it much lately so I could be off a bit too.
I am afraid there is no new lows of silliness Trump can sink to these days.
This is an excellent argument and I wish it were appreciated more generally and not merely when it can be used to discredit Trump.
Economist types keep touting the excellent state of the economy by pointing out the 4% unemployment rate, but when one brings up the low participation rate there are all sorts of weak counters to claim that participation rate doesn’t matter and only the unemployment rate does.
E-verify and other immigration law enforcement would likely move participation rate for minority citizens higher. I spent a few interesting years with a church group trying to get employment opportunities for men and women exiting prison, high percentage of blacks among them, and we heard often from employers who just preferred not legal workers. This was in Ohio and an associate of our program who moved to Denver related the same out there.
Your metrics are about as crappy as Trump’s metric. A few things that lower labor force participation rate and employment to population ratio:
A) More years of education in lieu of working
B) Retiring earlier
C) A greater proportion of the population in prime college years 18-24
D) A greater proportion of the population in prime retirement years 62+
In PGL’s world all 4 of these things are BAD.
@Jay,
How do the four things you listed each negate the point of PGL’s post?
Joel:
Good question, they do not.
@Joel
You can trust the Angry Bears, or you can trust the Philly Fed
“Analyzing people’s reasons for not participating in the labor force provides a relatively clear idea of the causes of declines in the labor force participation rate. The number of disabled persons has been steadily rising; retirement had not played much of a role until around 2010, at which point it started to make a large impact on the overall participation rate. In particular, the decline in the participation rate in the past one-and-a-half years (when the unemployment rate declined faster than expected) is mostly due to retirement. Furthermore, nonparticipation due to enrollment in school has been another significant contributor to the secular decline in the participation rate since 2000.”
https://www.philadelphiafed.org/-/media/research-and-data/publications/research-rap/2013/on-the-causes-of-declines-in-the-labor-force-participation-rate.pdf
Jay:
You can be polite and make your point without the name calling or don’t and your comments will disappear. Your choice.
Picture worth a thousand words, so supplement with a picture next time.
Show the graphs with various unemployment and participation rate measures together.
That would allow readers to see the performance and gauge for themselves rather than wading through verbiage.
Add the data for supplementary analysis.
OfftheStreet is right. Here is part of what I just put in the comment section over at Econospeak per my latest post in response:
I used to do this on a monthly basis after each BLS release but have not being doing this in quite a while. I should have done so with that post except I have a bit of a difficulty with my current clunky laptop in terms of making the graphs and getting them up on blogger.
Yea I know – no excuses. I need to head down to Best Buy and buy a new lap top.
“In PGL’s world all 4 of these things are BAD.”
No Jay – I never said that. All I said was we should present the data in a more informative way. Thanks to the rest of the crew for their replies to Jay’s overheated comment.
“A) More years of education in lieu of working
B) Retiring earlier
C) A greater proportion of the population in prime college years 18-24
D) A greater proportion of the population in prime retirement years 62+”
This is two things not 4. (A) and (C) capture the same thing. So do (B) and (D). I have at many times noted the latter and my read is that this might lower the employment to population ratio at full employment by about 2% not 4%. Now if Jay has any evidence that blacks have decided to pursue higher education more vigorously – great. Could he present his evidence?
pgl:
I believe Jay may answer you now. Are you the same guy I read over at EV on occassion?
Run75441 – yes. Jay’s “answer” starts with:
‘You can trust the Angry Bears, or you can trust the Philly Fed’.
My post had very little to do with WHY labor force participation rates were low. So Jay is off on his usual diversions here.
pgl:
Not a surprise. EM and I talk a lot also about unemployment.
Your point and reasoning is valid on U3 declining and PR decreasing. People drop into Not In Labor Force which is not reflected in either. In 2001, I started reconstructing the BLS charts and forecasting true U3. Laurent Guerby (France) was another who was doing so also.
PGL:
You may find this interesting. It is not the Fed; but, this is their job and it is more current. Maybe thiis will answer Jay’s remark?
It is unemployment so I was just looking around to see what I might have in my little library.
“The labor force participation of men and women 55 years and older rose from 2000 to 2009 and subsequently leveled off. This plateau could be attributed partially to the fact that the oldest baby boomers reached age 62 in 2008 and became eligible for Social Security retirement benefits.”
I am sure most of us born in the late forties and fifties will soon retire. It is inevitable as I no longer do bench presses at 240#, squats at 300#, or run my 10Ks anymore – walking works with my Elk Hound. At my mostly full time job, I am paid well for my knowledge and education which has helped me fair better than most in a changing economy. Hopefully, the many start to assist the millennials and the younger crowds from the burdens of student loan debt and being indentured to political and commercial interests which will create an economic environment the order of magnitude as deep as the great recession.
A few comments on Jay’s latest diversionary link:
“February 6, 2014”. The author wrote this four years ago.
“over the period of this faster-than-expected decline in the unemployment rate, the labor force participation rate has also declined.”
Ah Jay – that was my point!
“A simple argument is that jobless workers, in facing difficulties in finding a job, are becoming discouraged and leaving the labor force, thus pushing down both the unemployment rate and the participation rate. To the extent that this argument is true, unemployment has been declining for the wrong reason.”
She is right on here. Of course there may be other reasons that partly explain the decline in the labor force participation rate. I have never disputed this.