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Saturday, July 6. 2013

The ugly news they won't tell you

Via Ross:

The unemployment rate for African-Americans is a devastating 23.7 percent.

The unemployment rate for Hispanics is 13.2 percent.

The unemployment rate for women is an unbelievable 11.6 percent.

The unemployment rate for youth is 16.1 percent.

The Labor Force Participation Rate
has never been lower since the seventies, when the rise of the
two-income household began. This, truly, represents a War on Women.

Posted by The News Junkie at 12:33 | Comments (27) | Trackback (1)

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The News Junkie: The Labor Force Participation Rate has never been lower since the seventies, when the rise of the two-income household began.

A large part of the decrease since the financial meltdown is due to the aging population. See Kelly & Odenath, The Labor Force Participation Puzzle, JP Morgan Market Insights 2013.

#1 Zachriel on 2013-07-06 13:02 (Reply)

Wait! I thought people were going to have to work longer due to the failing old age security programs and the destruction of wealth due to the housing collapse and general market destruction in 2008?

So now the workforce participation rate is down because old people are stopping work?

That doesn't compute. Perhaps the old people have stopped working because after 50 you are screwed if you lose your job. Which is why we need to streamline small business formation to give opportunity to older workers thrown out of work, college grad unable to find full employment and the impending legalization of millions of immigrants. We don't have the jobs in the DC sanctioned economy so we need new businesses to pick up the slack.

How do we get new businesses? Glad you asked, REDUCED regulation and repeal of job killing bureaucratic mandates.

It's science, there is an overwhelming consensus. Why are Democrats so against scientific consensus?

#1.1 JKB on 2013-07-06 14:14 (Reply)

JKB: Wait!

Workforce participation can increase among older workers, while overall workforce participation decreases due to the aging population.

#1.1.1 Zachriel on 2013-07-06 14:20 (Reply)

Ya'll are confusing yourselves. Ya'll might want to revisit what you wrote in all ya'lls first comment.

#1.1.1.1 JKB on 2013-07-06 17:06 (Reply)

Remember, it's Zach. Most of what "they" put out is BS.

Yes, there are ways to stoke the stats so it SEEMS this is true, but the reality is (and I have my parents and in-laws to testify to this fact) low interest rates have forced retirees back into the workforce. In fact, part of the reason why unemployment is lower is because jobs are going to older individuals, while younger people simply aren't looking for work.

My 16 year old son could be working, and normally would be during a summer in a good economy. But there are no jobs to be had. One reason is because older people are taking jobs formerly meant for younger folk. My 18 year old son is working part-time, because that's all the work he could find. Even where he works, jobs typically filled by college kids, 3 of the workers are full timers now, over the age of 30. The company felt hiring these men was a more reliable and efficient use of their money, given the circumstances.

All things being equal, in a good economy, the non-entry of my son would not impact the labor participation rate. He's not been on before, hasn't left. He's essentially a non-statistic. Thus, the re-entry of the older folks SHOULD increase the participation rate. Except that younger folks are still falling off.

When I was laid off several years ago, I was joined by 11 friends my age. Today, 3 are still not working. 4 have left our industry altogether and taken jobs just to earn a buck (and I applaud them for this acceptance of a harsh reality). The number of under-employed is also much higher today than in many years before.

The only means by which an aging population can impact the participation rate by lowering it is if they retire and don't work. But few people are taking early retirement these days, because fixed income living is damn near impossible.
When you consider this, and factor in the number of jobs (reported monthly, so you can go back and document this) going to over 55's, you're in a quandary with regard to the "participation is falling due to an aging population".

Times are very bad. But you wouldn't know it from the stats. They are cooked pretty well. Even inflation is under-reported.

#1.1.1.1.1 Bulldog on 2013-07-06 17:26 (Reply)

http://www.calculatedriskblog.com/2013/05/labor-force-participation-rate-research.html

only roughly 1/4 of the decline is attributable to retirements. Given many retirees have rejoined, it's probably less.

I just read the Kelly & Odenath piece, it's about 2 months old. It's also a Wall Street fluff piece. It's designed to convince people to invest because "things are getting better". The idea that boomers are retiring is based on the 'fact' that they 'should' be retiring. The evidence of this occurring is non-existent. I work with 5 people who are currently over 65. I work with 13 others who are between 55 and 65 and dreading retirement, because they can't afford to take the 'pay cut'.

Kelly and Odenath barely discuss disability, which is one area that has seen significant increases in its use.

#1.1.1.1.2 Bulldog on 2013-07-06 17:46 (Reply)

Same with the JPMorgan ref --it's trying to play down the 2008 event, since it was a major behind-the-front-rank perp.

#1.1.1.1.2.1 buddy larsen on 2013-07-06 18:16 (Reply)

Yet, it appears that no one in DC cares.

#2 walt moffett on 2013-07-06 13:46 (Reply)

Why should they? The folks in DC are termites. See, the thing about a houseful of termites is that the condition of the house doesn't matter to them. If the house is still standing or if it has collapsed, the termites will eat well no matter what. Kind of hard on the people living in the house, though.

#2.1 fiftyville on 2013-07-06 14:01 (Reply)

Another factor could be voting patterns. The most impacted groups are never going to vote for the other guy and not squeaking.

#2.1.1 walt moffett on 2013-07-06 15:16 (Reply)

Great Analogy!!

#2.1.2 Exasperated on 2013-07-07 07:53 (Reply)

Women who kep to hearth are part of yall's incredible figure.

They ain't unemployed but rather well employed in a godly vocation.

The only folks meself has viewed warrring on women are women.

Let yall's women stay home.

#3 Leag on 2013-07-06 14:54 (Reply)

Imagine the 180 the MSM would do if it was a GOP president? Imagine the noise the black agitators would be making for jobs.

#4 feeblemind on 2013-07-06 15:01 (Reply)

Boomers started hitting 65 a mere two years ago --birthdates strung out from 1946 to 1964. Whatever is wrong right now ain't the boomers. Will be worse yet because of them, but twenty years of govt attack policy on the manufacturinbg sector is hardly a boomer effect --except thru the ballot box, which is a different story altogether.

Naw, today's mess

http://www.financialsense.com/contributors/jr-nyquist/twenty-years-manufacturing-decline

... is a government policy mess.

http://www.youtube.com/watch?v=6mqSXsNJzRM

===

http://bastiat.mises.org/2013/07/monster/

http://economyincrisis.org/content/the-continued-decline-of-american-manufacturing

(articles good, sites are a find)
===

The demographic problem is tough, okay, but it didn't have to be anything more than an adjustment, if begun in time --watch that very short youtube for an inkling of the force that gave a standing ovation at a SOFU to their own stunningly destructive (or stunningly constructive, if you're trying to ruin the USA) obstructionism.

It's right there to see --they saw the demographics as the perfect time to slap a bunch of lamprey eels onto the carotid artery of the aging body politic.

===

bonus youtubes:

http://www.google.com/search?sourceid=ie7&rls=com.microsoft:en-US&ie=utf8&oe=utf8&q=youtube+democrats+defend+fannie&rlz=1I7GGLL_en

#5 buddy larsen on 2013-07-06 15:09 (Reply)

The dollar value of our manufacturing sector is larger than it has been in years. The problem is that there are no jobs being added. Progression looks like this 500 Americans -> 700 Mexicans -> 1000 Chinese --> 150 American Engineers/Programmers and lots and lots of Robots. This return to US manufacturing has been occuring for at least two years now. Turns out those robots and programmers are lots more flexible and productive than unionized Americans or Chinese peasants, and less expensive than transporting stuff both ways.

#6 fiona on 2013-07-06 20:03 (Reply)

KKR just bought Steinway, late last week. Dunno where that fits in to that progression, but i think it does, somewhere.

#6.1 buddy larsen on 2013-07-07 01:14 (Reply)

When the economy goes through a serious contraction and downsizes, a lot of the jobs that are lost do not come back. Business finds other ways to do the same work more efficiently with fewer people. In some cases, it's by outsourcing, often to cheap labor countries like China, in others it's by replacing workers with machines and better technology (which offers better jobs but fewer of them, as fiona remarked). This is in no small measure due to the growing burden of government regulation, not to mention the economic uncertainty arising from Obamacare. Unlike large employers, a small businessman who loses virtually all discretion over who he can hire and fire and who ends up spending more time filling out government paperwork than he can devote to his business either finds a way to eliminate that burden (i.e., he stops hiring) or else he punts. People need to realize that the economy has gone, and continues to go, through a tectonic shift. The zombies in Washington are not about to tell folks the truth, not if it means they'd lose THEIR jobs. Now that would be a crisis.

#7 Agent Cooper on 2013-07-07 01:45 (Reply)

It shouldn't be news to anyone that 10K Boomers A DAY are on track to leave the workforce. Obviously these numbers have been skewed due to the 2008 meltdown, but even if in fact, only half of the folks eligible to retire do so, that is still a significant number. It underscores what a poor job our economy is doing at creating new jobs. One step forward, one step back.
Clayton Christensen makes a distinction between Disruptive Innovation and Innovation in Efficiency. For the time being the balance has shifted to the "Efficiency" spectrum, ergo we are destroying more mid level skilled (re Middle Class jobs) than we are creating. That's a problem for our Economy and all the First World countries, the 800 pound gorilla in the room.
I don't know any more than any of you when the next disruptive innovation is going to come along. I can tell you that it doesn't happen on schedule, or because you need it, or just because you throw a lot of money at it. I also doubt that any new technology is going to generate the volume of jobs that resulted from past disruptive innovations because the "Efficiency" trends act as a countervailing force.

#8 Exasperated on 2013-07-07 08:13 (Reply)

Suppose in the 30's the government had borrowed trillions and sent food stamps and unemployment to the people through the mail to cover up the problem. No long lines to get bread and no lines of workers for the few jobs that were available. Would it then have been "The Great Depression"? Same number of people out of work and same misery but with a paycheck. Is this what a "modern" depression looks like? Is this how a president gets reelected and how a Senate stays the same party while the economy is on it's knees? Surely if this was happening our esteemed media would report on it. The political parties could never get away with such a coverup. Could they?

#9 GoneWithTheWind on 2013-07-07 09:42 (Reply)

These stats bear out the absolute perfect wedge issue for the R's on immigration. Simply state that the immigration "reform" bill cannot go into effect until black unemployment equals the overall national average. Take that position and there is a natural wedge into the D's base. And, as much as the libs want to thing that they are one big happy family, the D's have created a house of cards due to trying to appeal to every socio-economic subgroup they can imagine. But who can argue that we need to import more low income/low skill workers by the millions when we have millions of US citizens with the same skills? But take this approach and the congressional black caucus and all of the race baiters have to side with their constituency or risk total irrelevance.

#10 john sarich on 2013-07-07 09:54 (Reply)

Bulldog: Yes, there are ways to stoke the stats so it SEEMS this is true

"Reality has a well-known liberal bias."

Kelly & Odenath use a simple and standard methodology, by weighting according to cohort. It shows that more than half of the decline, 2009-2013, is due to demographics.

Bulldog: only roughly 1/4 of the decline {2008-2011} is attributable to retirements. {indirect citation to Aaronson, Davis & Hu, Explaining the decline in the U.S. labor force participation rate, Chicago Fed Letter 2012}

Yes, but the longer demographic trend is about half post-1999, so that means while there will be some improvement as the economy recovers, it will be offset somewhat by the longer trend.

Bulldog: It's also a Wall Street fluff piece.

Notably, you don't bother to discuss the methodology. Each study examines a somewhat different period. Surprisingly, you hand wave research even though it reaches much the same conclusion as your citation.

This returns us to the original point. Labor force participation rates have been declining since 2000, so attributing it solely to the recession would be incorrect.
http://data.bls.gov/generated_files/graphics/latest_numbers_LNS11300000_1948_2013_all_period_M06_data.gif

The downward trend is expected to continue for some time regardless of the economic cycle.

#11 Zachriel on 2013-07-07 10:03 (Reply)

You are quite correct that the labor participation rate has been declining since 2000. Looking here: http://data.bls.gov/timeseries/LNS11300000, we see that the rate was fairly stable from 2003 to 2008 and then it declined. Obviously, the crash played a large part of that, but for five years of Obummernomics, the trend hasn't changed. There has been very little job creation (as evidenced by the high unemployment rates of the non-Baby Boomers). In fact, companies are cutting hours and moving people to part-time status to escape the Utopia of ObamaCare as well as the rest of the regulations that have been inflicted on business. So of course the downward trend is expected to continue. Why, that's just fine since Obummer is at the helm. He shouldn't be held accountable. After all he's only been president for five years (oops, some of that time he was occupying the Office of the President Elect). During his tenure, he has spent money (that would be our money) on businesses run by his cronies - many of which have failed. He has bashed and demeaned job creators, he has made running a business more difficult with more regulations. He has claimed to be responsible for the increase of natural gas and oil production when he had nothing to do with it and where he could have had something to do with energy production he has not (he has blocked oil leases on Federal land). He has done nothing for job creation so of course the trend will continue.

So I would ask those on the left who complain about business (they charge too much, pay too little, don't have unions, don't pay for health care, whatever...) why don't they start a business and show us how it's done. Why if those know-it-alls could run things, I'll bet they could make sure more people are employed, right? Those regulations, those potential law suits, those taxes aren't what's slowing things down, right? It's those business men and women! They're screwing things up, right?

#11.1 mudbug on 2013-07-07 23:13 (Reply)

The methodology for Kelly and Odenath is questionable, therefore not worth discussing, and they came to very different conclusions.
Kelly and Odenath focused on the decline since 2008. The paper I referenced said only 1/4 of that decline is attributable to demographic changes.

Yes, the decline had been occurring for some time, but it was not consistent with demographic "baby boomer" retirement trends. This certainly is NOT the case today, nor has it been the case since 2008.

As such, the Kelly and Odenath piece is fluff. Trying to misdirect people into thinking "it's just a bunch of boomers retiring", when in fact the long term trend has been down, but NOT because of retirees since 2008. The reality is such that, since 2000, all things being equal, LFP should be in the range of 63% right now - quite different from where Kelly and Odenath say it should be.

Don't bother responding, Zach. You're a puppet for a regime that is dying. Your junk science doesn't hold, and you exhibit the junk by dredging up Wall Street fluff.....long ago proven to be written to sell stocks and bonds in the worst of times.

#11.2 Bulldog on 2013-07-08 15:25 (Reply)

mudbug: You are quite correct that the labor participation rate has been declining since 2000. Looking here: http://data.bls.gov/timeseries/LNS11300000, we see that the rate was fairly stable from 2003 to 2008 and then it declined.

Yes, during the bubble, there was a moderation of the trend. So take a longer look from 2000-2013.
http://data.bls.gov/generated_files/graphics/latest_numbers_LNS11300000_2000_2013_all_period_M06_data.gif

Now, the trend is more apparent. The economic cycle moderates, but doesn't change the trend.

mudbug: Obviously, the crash played a large part of that, but for five years of Obummernomics, the trend hasn't changed.

Of course not. The trend is demographic, per the studies cited above.

mudbug: He shouldn't be held accountable.

Obama should be held accountable for things under his control. The demographic trend is outside of his control. The downward trend is expected to continue for some time regardless of the economic cycle.

#12 Zachriel on 2013-07-08 07:41 (Reply)

Bulldog: The methodology for Kelly and Odenath is questionable,

It's based on standard demographic weighting.

Bulldog: therefore not worth discussing,

In other words, you have no argument.

Bulldog: The paper I referenced said only 1/4 of that decline is attributable to demographic changes.

Between 2008 and 2011. Kelly & Odenath measure through April 2013. Quoting from Aaronson, Davis & Hu: "The authors conclude that just under half of the post-1999 decline in the U.S. labor force participation rate, or LFPR (the proportion of the working-age population that is employed or unemployed and seeking work), can be explained by long-running demographic patterns, such as the retirement of baby boomers. These patterns are expected to continue, offsetting LFPR improvements due to economic recovery."

The economic cycle modulates, but doesn't change the trend. Of course labor force participation dropped in the aftermath of the financial meltdown. That's not in question. However, as the economy recovers, it is returning to trend, which is still downward. That brings us back to the original claim: "The Labor Force Participation Rate has never been lower since the seventies, when the rise of the two-income household began. This, truly, represents a War on Women," a claim which ignores the role of demographics.

#13 Zachriel on 2013-07-08 15:49 (Reply)

I have an argument, because I did the work on my own by culling the BLS and SS databases. The work is wrong. Flat out.

Since 2008, the increase in retirees has been significant. Comparatively speaking, the total increase in retirees since 2008 has been about 3.3mm - virtually all early retirees (forced out in layoffs, most likely). In 4 1/2 years this matches the total increase in retirees from the period of 2000-2008.
This will have an impact on labor force participation rates, EXCEPT that over 12mm additional workers were added to the labor force since 2008. Meanwhile, in the same period, almost 2.2mm jobs were lost. So even if you want to assume that retirees are the net 'cause' of the drop in labor force participation rates, this cannot be so. As I mentioned, earlier, only 1/4 could be attributed to this reason since 2008 - and in fact it is closer to 1/5.
Another reason supporting my point of view is that over 2.5mm workers are counted as "not in the labor force marginally", which is up by 800k since 2008.

All these point say one thing. It's not a demographic shift. Early retirees? Forced out. Many working part time and under the table.
Food stamps usage up? Indicative of a demographic shift?
Disability claims up? Indicative of a demographic shift?

I don't have an argument? Your argument is based on an agenda and you're claiming "methodology" for support of the agenda, when the facts say very clearly one thing - the labor force participation rate is in the tank because nothing has improved.

Do the work yourself rather than relying on Wall Street shills. It's not hard to do and it speaks volumes.

Your original statement was "a large part of the decrease since the financial meltdown is due to the aging population" . It's not large, and it's not due to an aging population and it doesn't take much effort to figure that out. As usual, as I've stated so many times, you've shifted the argument to be about something OTHER than what you originally discussed. Most likely because you know you're wrong and you're ashamed.

#13.1 Bulldog on 2013-07-09 10:00 (Reply)

Bulldog: Since 2008, the increase in retirees has been significant.

Sure it has, however, your analysis ignored changing demographics.

Let's try again. The claim is that the current low labor force participation rate is due solely to the economic cycle.

The News Junkie: The Labor Force Participation Rate has never been lower since the seventies, when the rise of the two-income household began. This, truly, represents a War on Women.

However, you can easily determine that the drop has been ongoing since 2000, while from other data, we can see this general trend is due to the aging population. That doesn't mean some of the drop today isn't due to the economic cycle, but the original claim misleadingly compares it to the 1970s, without accounting for the changing demographics. And without accounting for changing demographics, you might expect it to return to previous levels as the economy improves, which would be incorrect. It will return to trend, which will still be historically low.

#13.1.1 Zachriel on 2013-07-09 10:28 (Reply)

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Saturday, July 6. 2013

The ugly news they won't tell you