Tuesday, January 14, 2014

Shrinking Labor Force Reality?

Dan Burns over at MPP posted Wrong about the Shrinking Labor Force. It referenced Barataria: A Persistent Lie

First, I know nothing about this topic so I figured I would let you inform me why this matters? And what the "real truth" is....

Second, he linked to a term I had not heard before. Motivated Reasoning  I was very interested in this since I find paradigms, perspective, blind spots, self deception, self awareness, bias, etc fascinating. G2A Snopes and Relativity

Thirdly, there are no comments I thought is was an interesting post that deserved some.  However since I can't do it there, we will do it here...

By the way, I'll have to start checking in at Barataria occasionally.  They seem to have a very different view of reality than I do.

26 comments:

Sean said...

I think there's elements of truth in both sides of the argument here.

Most of the research seems to show that most (anywhere from 50-70%, depending on who you believe) of the labor force decline is coming at the upper end of the age scale.

However, there are two distinct issues at the bottom of the age scale, and both are at least partially related to a weak job market. One is the dismal job market for young folks with a high school or lower education.

The other is the fact that it seems more students are staying in college for longer, which is likely a result of the weak employment situation, but also partially a continuing trend of people seeking advanced degrees to further themselves.

John said...

I personally am just starting to see the baby boomer exodus at the company I am working at and those I have worked at. The up stock market has helped some of them make the leap.

The challenge is that I envision very low unemployment when all the "old duffers" exit the work force. Yet this doesn't seem to have happened yet.

John said...

The thing that frustrated me about the article was that the writer seemed to want to give Obama credit for something, yet all I have heard for years is that the GOP is blocking all of Obama's "good works". (ie economic stimulus)

So is Obama "responsible" for the "recovery"? Or is the GOP? Or is the Federal Reserve? Or more likely is it just the normal business cycle?

As the tootsie pop owl commercial says. "The world may never know...."

Sean said...

I didn't see any fluffing of Obama in the Barataria article, merely an argument that what is going on here is heavily influenced by demographic and societal trends that can't always be changed by policy decisions.

John said...

You are correct and I was incorrect... (my family loves to hear me say that) The writer doesn't give credit, they just say stop blaming Obama for this particular statistic.

"The truth – the labor force participation rate is at a 40 year low, down to 63% from a high over 67%.
The lie – that this is the result of people giving up looking for work, a sign that the “recovery” is weak (which can be blamed on President Obama)."

jerrye92002 said...

I think the truth has to be that labor force participation has plummeted during Obama's "time of tribulation," despite all the huffing and puffing about how magnificently they are doing. Rush Limbaugh a few days ago suggested that we could easily get the unemployment rate to ZERO, if we could just convince those folks to quit looking for work! And according to The Regime, the more people we have on unemployment, the better the economy gets, so why don't we all quit? Theatre of the Absurd, Act MMXIV.

The underlying theory is that the only real wealth production comes from people working (amplified by capital). The fewer people working the lower the wealth of the country, and depleting our wealth to pay people NOT working is insane. Compassionate, for a time, but insane in the medium to long term.

The truth is obvious, the cause is slightly debatable, the cure is simple.

John said...

So what was that simple cure again?

John said...

Also, any sources to back this thought up?

"I think the truth has to be that labor force participation has plummeted during Obama's "time of tribulation,""

jerrye92002 said...

There you go with that "sources" thing again. The graph YOU posted to start this conversation is pretty conclusive.

As for the simple plan, I'll let you work it out for yourself, starting from the axiom that Government involvement with the economy can have a very limited positive effect but very substantial negative impacts.

Laurie said...

Here is a link for anybody who cares about this topic. Right now that does not include me, as I haven't bothered to read it, but it looks pretty good.

The biggest question facing the U.S. economy: Why are people dropping out of the workforce?

Mostly I was going to give J a very brief lesson on how easy online research is. I amuse myself by asking google a question. This time I typed in "has labor force participation plummeted during Obama's term in office due to a weak economy"

Maybe I'll read it letter or someone could post a one or 2 sentence summary.

jerrye92002 said...

Laurie, I read your item, and I notice it says essentially what Sean did in the first response, here.

You are a teacher and you can give lessons, but that doesn't mean that the students learn. In this case, I prefer simple explanations. It is clear from the chart that, during the time of Obama, the LFPR fell dramatically. Therefore, he caused it. I know a number of these folks that have left the work force, and none of it was voluntary.

Obama and his cronies remind me of the sheriff who found a dead man in the river who had been shot three times, stabbed, and tied hand and foot. "Worst case of suicide I ever saw," he said.

Sean said...

Private sector job growth:

January 1993-January 2001: +20.9M

January 2001-January 2009: -0.6M

January 2009-December 2013: +4.0M

Democratic Presidents are good for private sector job growth.

Laurie said...

my lesson was on how to easily do research to find expert analysis to back up your own opinions. But that doesn't seem to be something you value. I am frequently surprised on the wide variety of subjects for which you trust your own expertise.

jerrye92002 said...

Laurie, I am quite capable of doing my own research; I just do not feel the necessity to "appeal to authority" to support my opinion. Part of that is because others will come up with contrary "facts" that support THEIR opinion, and then the discussion can take place to ferret out, in the best of circumstance, the real "TRUTH." For example, Sean's numbers look real enough, but his conclusions don't strike me as correct. I'm looking at
http://research.stlouisfed.org/fred2/graph/?s[1][id]=PAYEMS#

and the statement that "Democratic presidents are good" doesn't hold water if both Obama and Clinton are included, and unless Reagan and Bushes 41 and 43 are excluded from the Republicans. The apparent "truth" is that Obama has delayed historically-normal employment growth for 5 years.

Sean said...

Fine, let's go back further. These are private sector jobs only (excluding farm and government):

Carter (1/77-1/81): +9M
Reagan (1/81-1/89): +14.7M
GHW Bush (1/89-1/93): +1.5M
Clinton: +20.9M
GW Bush: -0.6M
Obama: +4M

Funny how the answers become less simple when the data doesn't support your conclusion.

John said...

So how would this look relative to who controls Congress?

John said...

Party Control Chart

jerrye92002 said...

Sean, I simply cannot square your data with my chart from the BLS. I don't doubt your numbers or ask for sources, because I believe what we have here is the classic case of "dueling facts." If I may suggest a way of reconciling them, in an effort to establish "truth," I am thinking that one should take your numbers and then subtract the number of jobs LOST during that same time period. Then I would subtract the number of jobs not created-- the number required to keep up with population growth, and the Obama recession hasn't managed even that, most months. In other words, there are a certain number of new jobs required just to keep the LFPR stable.

The problem with the usual unemployment number is that it does not count those who have given up looking for work (lowering the LFPR) or taking something less than what they wanted. The number to look at is the "real unemployment rate," and that has been over 13% for most of Obama's time in office.
http://www.cnbc.com/id/101326426

John said...

For your convenience.
FED All Employees Graph
CNBC Real Unemployment Rate

I really question the idea that who is the President is a significant causal factor regarding jobs growth.

How do you think a President influences this when often they are gridlocked with Congress?

I see the Federal Reserve Bank, consumer choices and the normal business cycle being much more important.

John said...

My simplistic view is that based on my rule of ~8 years, there should have been a significant recession in ~2001. However Bush et al minimized the pain with the tax cuts / deficits, which meant that the recession was twice as painful in 2009.

Pay me now or pay me later...

And Clinton was incredibly lucky to be in charge during the internet revolution and to have the GOP holding his feet to the fire.. Talking about a major stimulus force.

jerrye92002 said...

Yes, I know President's aren't fully responsible for the economy, but look at who takes and gets the credit when things go well? Shouldn't they get the blame when things go badly? And as I said, government policy [embodied in the President] can have a small positive influence but a large negative influence on the economy. Why NOT affix blame accordingly?

John said...

If you want to praise/blame irrationally like the majority of Americans, please go ahead with my blessings.

Personally I am sticking with causation and rational thought.

jerrye92002 said...

Am I really placing blame "irrationally"? I have long thought that government plays too large a role in our lives, and government, particular liberal government, has SOUGHT and WIELDS that power. So when a President promises that putting each and every American $3000 further in debt will keep unemployment below 8% and return us to 5% within two years, and the results are a leap over 10% and 5 years above 8%, they SHOULD get all of the blame, whether they should have made the promise or even been able to do it at all.

In other words, I don't consider it at all irrational to suggest that those who promised to fix it and didn't get the blame for the ongoing mess. Whom else would you blame, rationally?

Sean said...

Jerry, you're looking at the "non-farm" numbers, which include the changes in government workers. I'm using the "total private", which excludes farm and government.

jerrye92002 said...

So how should that change my interpretation? Or, looking at it my way, what would be YOUR conclusion?

Sean said...

The BLS numbers are net figures so the adding/subtracting has already been done. I will agree that job growth under Obama has often lagged population growth, just as it did under the previous President.

The point is that it's not a simplistic "this happened when Person X was President, so Person X is good".

Your stimulus argument, for instance, ignores that the creation of the package was based on incomplete economic information. At the time they created the stimulus, the BEA thought 2008 Q4 GDP was -3.5%, when in reality it was -8.9%.

The economy was much worse than anybody thought, which is (in large part) why the stimulus didn't produce the results it was projected to in terms of unemployment rate.

Economists who evaluated its impact on employment, though, found that it created the jobs it was supposed to, but the larger economy just lost more jobs because it was worse than they knew at the time.