Thursday, September 16, 2010


The President and the Congress continue to worry about unemployment and with good reason. The recent unemployment rate had to drop to reach 9.6 percent. Seasonally adjusted unemployment rings in at 14.9 million. However, if we look at labor force and employment trends of the Bureau of Labor Statistics Current Population Survey back to 2000, the employment situation looks even worse.

The civilian labor force drifts upward but at a lower rate than population growth. The adult population keeps growing at annual rates around 1.2 percent while the labor force grows at annual rates around .9 percent. The difference is small for a year or two but gets significant over time.

Those employed and the unemployed who are looking for work are classified as in the labor force. Otherwise people are classified as not in the labor force. The employed are up since 2000, but at much lower growth rate than the labor force; and at a much lower growth rate than those not in the labor force; and at a much lower growth rate than the unemployed.

The unemployed jumped from an average of 7 million in 2007 to 8.9 million in 2008 to 14.3 million in 2009, but those years were recession years. Part of the spike in unemployment results from the recession, but the glacial pace of growth in the employed back to 2000 suggests that some of the unemployed come from longer term decline unrelated to the business cycle.

In the years from 2000 through 2009 the annual growth rate for the employed averaged .24 percent; from 2000 to 2008 it averaged .75 percent; from 2000 to 2007 it averaged .93 percent. The year 2007 had the highest average for employment of any year of published data, but still with slow growth going back to 2000.

Other questionable trends from 2000 to 2009 include the rapid growth of the part-time employed. Part-time employment was up over 4 million from 2000 to 2009, while the full time employed dropped about a million.

Those employed from the ages of 16 to 54 dropped from 2000 to 2009. Those employed for ages over age 55 were up 8.9 million. Those leaving high school and college can’t find jobs partly because there are not enough of them but also because more of their parents continue to work and maybe because they cannot afford to retire or they need health care from a job.

The recession will end and employment will pick up, but the changes of the last decade point to a trend of a rising share of America’s labor force remaining unemployed or out of the labor force.

When America spends its way out of recessions Americans assume there will be jobs for those who need them. If employment lags behind we hear suggestions for a business tax break or two like we have now, or the great cry sounds to “Get some training” but that is about it for policies on jobs.

The 40 hour work week, eight hours a day with time and a half for over time continues to be the federally mandated work week as it has been for nearly 90 years. If someone suggests a 35 hour work week it might spread the work around to some of those now unemployed. Business hates the idea and politicians won’t touch it, but if the ominous trends in employment continue someone will need to have a new idea. Right now that sounds like a revolution.

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