The Aftershock: The Jobs Report on Friday

[Beet]

Over 5 million private sector jobs have been created since February 2010; that's faster than population growth. Since the Bush recession ended, private sector job creation has been happening much faster than population growth.

[Beet]

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Given that the 'Bush recession' is still ongoing, this is meaningless. Also, why then is workforce participation at a 30 year low?

See here for the answer to your workforce participatoin question.

Officially, the recession ended in June 2009, according to the National Bureau of Economic Research, which dates recessions. Regardless, the job numbers from February 2010 to now are the same, and likely underestimated.

[Beet]

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And who was president then?

Obama was President when the recession ended.

[Beet]

Beet:

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I presume you mean this?

Workforce participation for those 55+ has actually increased since 2008. The bulk of the decline is hitting young people from 25-45, those who've already finished their education. Men, moreso than women.

I agree that the longterm secular decline will eventually kick in, but that's not what we are seeing here. It's not the folks retiring that are driving down workforce participation - it's the young people that are not able to find work.

This, combined with the upcoming secular decline - is a disaster.

I mean the whole discussion, which includes your point about the 55+ and my counter-point.

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Great argument, except for the fact that people 55+ have actually seen their workforce participation increase.

I'm aware of that (and it's yet another trend that has both secular and cyclical components)- but it doesn't contradict the notion that changes in workforce participation can't be used as a proxy for job availability or the economic cycle, or any of the other factors I pointed out. If anything, it reinforces the absurdity of it-- 65+ have always had much lower workforce participation rates than under 65's, but no one would have called that a crisis. Nor does the fact that more 65+ are joining the workforce mean they are better off. It depends on why they're doing it. If they're doing it based on need, then rising workforce participation is actually a bad sign.
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I appreciate having the exact same discussion (which you apparently don't remember) again. I really do.

Secular decline has been going on for decades-- including among men age 25-45. Workforce participation among that group has been falling since the 1960's.

[Beet]

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How? Your argument seems to be that low workforce participation is either (a) inherently bad, or (b) a measure of how bad the economy is. I refuted that by pointing out that (a) workforce participation is a matter of choice and not inherently good or bad, and that (b) workforce participation can change in ways independently of how the economy is doing. That responds to either of your two possible points. To provide evidence for (b), I pointed to evidence that there have been secular declines in workforce participation among most groups.

Yes, there has also been a secular upswing of workforce participation among those 55+. That, too, is compatible with my overall point that this statistic is affected by secular factors independent of the business cycle or the state of the economy. Of course, the upswing among those 55+ is outweighed by the downswing among all the other groups, plus the mere fact that the population is growing older and older people are less likely to participate. But that is peripheral to my point.

There are two separate arguments there-- one among the connection between participation rates and the job market, and whether one can really be a proxy for the other, and the other about why the direction of participation rates are going one way or the other. I explain both. But workforce participation could easily be rising and that would not necessarily be a good or bad sign either. It's independent of the job market, and subject to conflicting economic interpretations. For example, rising workforce participation could be seen as a sign that more people are encouraged to look for jobs, but it could also be seen as a sign that more people are desperate for money. Falling workforce participation is subject to opposite interpretations.

Also, see this article by Bill McBride -- the recent trends in this statistic largely could have been expected, even without the recession.

Here are workforce participation numbers for men, aged 25-34, and 35-55, since 1970:
25-34      35-44

96.5   1970   96.9
95.2   1980   95.5
94.1   1990   94.3
93.4   2000   92.7
91.7   2005   92.1
89.7   2010   91.5

[Beet]

I'm sure 5 percent doesn't sound like much to you - but it's huge. Getting that 5 percent working was a major part as to why the boom of the 80s and 90s happened. We're back to the 70s and only about 2 or 3 percent over 1950. If we go back another 5 or so, we'll be back to where things were after the second world war.

Labor force participation isn't what determines economic well-being. If you produce more only by working harder, then you've essentially traded off goods for leisure. It's up to individual Americans to freely determine the best trade-off for them. It's not for your or me to tell them that they're better off working. Many people who don't formally participate in the labor force nonetheless do good, necessary things. Stay-at-home moms, for instance, can provide better care for their children than a disinterested and low-paid child care worker. Students, whether young or adult, can educate themselves and gain skills to be more productive later in life. Volunteering can provide valuable services to the community, and so on.

What determines economic well-being is productivity; or how much you can produce in terms of value from a given amount of work. If you asked people in ancient Egypt at the time of the Pyraminds what the labor force participation rate was, you probably would have gotten near 100%. But those people lived at a bare subsistence level. Increased productivity is what led to the industrial revolution, and what all growth, in the end, is based on. It is largely the result of market competition, with government assistance.

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If you oppose deflation, you should be an economic Keynesian.

[Beet]

Over 5 million private sector jobs have been created since February 2010

Even CNN debunked this. Wake up, dude.

Here's what CNN has to say about it:

"In 2009, Obama's first full year in office, people in states across the country were losing their jobs at a startling clip. In Ohio, the unemployment rate was 10.6%.
 
But over the next few years, the nation saw slow increases in employment in the retail, education and health care sectors. Today, most states are gaining jobs. The key swing state of Ohio now has a 7.2% unemployment rate.
 
The Bureau of Labor Statistics confirms that a lot of jobs have been created under Obama's leadership -- 4.4 million by the bureau's latest count. What Obama did not say, however, was that the nation shed 4.3 million jobs during the early days of his term, and that the net gain since he took the oath of office in January 2009 is just 125,000 jobs"

CNN claims that the 5 million claim doesn't tell the whole story and is therefore false, and if you want to read it that way, then yes, I'll amend my statement to be

"4.3 million jobs were shed during the early days of Obama's term, and since February 2010 over 5 million private sector jobs have been created."

No one is hiding the facts here- I freely admit the job situation Obama inherited was disastrous, with a loss of some 700,000 jobs/month, resulting in about 4 million jobs lost before the full effect of his policies could be felt. But that doesn't change the fact that since February 2010, private sector job growth has been proceeding at a pace quicker than population growth. We can also supplement that with targeted stimulus, if we want to. But the truth is, state tax revenues have increased for 9 consecutive quarters and soon, state and local government employment will stop being a drag, which should improve the trend further.

[Beet]

Having the core of your future workforce gutted and out of the market is a bad thing. You're welcome to spin and argue that it's not.

Long term unemployment is a bad thing, yes. The damage to the careers of young people today from the bad job market is a very bad thing.

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I'm not quite sure what you're saying here. I think work should certainly be encouraged for people who want assistance. But again, I don't discount that lots of people could have valid reasons for not being in the formal labor force. I disagree that more work is an inherently good thing. Inherently, work is disagreeable, otherwise it wouldn't be work.

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As long as men are freely making that choice and have the means or accept the consequences, they might resist you forcing them to do something they don't want to. There's a name for forcing people who don't want to work to do so - it's called slavery. It used to exist in your own state of Texas, in fact.

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Ah, but now you sound like Joseph Chamberlain Class warfare would happen, I suppose. Only Chamberlain believed that the ballot would give people that right, for they would be in the majority.

[Beet]

Mealy mouthed defenses of this bad economy will not save Obama.

When is Obama going to man up and take responsibility for the last year or two? Is that too much to ask for from a president?

Well, I've been talking about his record since February 2010, which is in the last two years.

[Beet]

There's no point, Ben. Like Obama, Beet is in Washington, and is out-of-touch with what is happening outside of Washington. Hell, I am abroad at the moment, but even I know what is happening back home (and my ties are to more affluent counties relative to the nation's median county).

Hey, my cousin just spent his life savings on a misguided conversion to Islam, only to find out the person he gave his money to shystered him out of it, and now he's broke penniless (fortunately another result was him abandoning Islam). He even refuses a car from his parents because he says he can't afford the insurance. So I'm not exactly ignorant of economic difficulties. The economic situation of much of the country is outrageous. But really the only hope is much more stimulative and lower/middle class friendly policies that increase incomes at the bottom.

[Beet]

Beet, if they are home because they want to be home, that's one thing. But I don't believe that's what's happening. What I see happening is the men simply not getting hired for jobs. I work with a fair amount of street people, and it's really criminal what's happening to them. These are able-bodied young men that could be put to useful work and put their hands and minds to productive enterprises, that are being discarded like worthless refuse.

This bothers me.

It's sickening. I certainly think Obama should have fought harder-- for progressive policies, for his stimulus proposal, and so on. My dissatisfaction is from the left, because of my study of the economy in my life so far. I just don't buy claims like Mitt Romney's that the solution is to cut the marginal tax rate on medium-sized businesses. Business taxes occur on profits, which means that they only pay a tax if they're already making a profit. Costs incurred in doing business are deducted. A business will always invest if the return is greater than the cost, so the tax rate it pays on its profit will only have a marginal decision on whether to invest. The main factor is whether they'll be able to generate enough revenue to cover costs. And that goes back to what's in my signature.

That money would be better spent transferred directly into the pockets of poor and middle class people who would spend it. Businesses would invest then because they would have the customers to generate the revenue they want. Hence, all policies that strengthen the middle class, are, on balance, better for the economy. A rising tide lifts all boats. By the way, in the past, a lot of that middle class income growth was pushed along by private-sector unions. Unions are corrupt, they can hurt the competitiveness of the industries they organize in, and strikes are one hell of an annoyance, but they can set wage expectations across entire industries that mean people have growing purchasing power year after year. And that leads to broad-based growth.

Last year, median income fell for all groups except the top 5 percent of earners. Is the solution really to make policy more favorable to the top 5 percent, to give companies more profits that they don't spend or hoard overseas?
 

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Yeah, the problem with the economy today is that willing labor isn't being utilized to its fullest extent. For all the quibbling over what this or that statistic means, I think we actually agree on the substantive issue.