Hunky Dory

SCENE:  Mitch BERG is driving down the road, when he notices Avery LIBRELLE by the side of the road.  LIBRELLE is standing by the trunk of a Chevy Volt; on the trunk is perched a miniature windmill, attached by cables to a terminal under the Volt’s open hood.   LIBRELLE is blowing on the windmill. 

BERG sighs, pulls over.  He gets out of the car, notes that there is no wind – it’s a flat calm – and walks up to LIBRELLE.

BERG:  Hey, what’s…

LIBRELLE:  Hah, Merg!  The economy is doing fantastic!  You were wrong!

BERG:  Um, what now? 

LIBRELLE:  Unemployment is under 6%

BERG:  That’s that’s because so many people have left the workforce, as we see on this chart here…:

 

…which is the Bureau of Labor Statistics’ Labor Force Participation Rate, representing the percentage of the labor force – able-bodied people between 16 and 70 – that are actually working.  As you can see, since Obama’s election, that number has plummeted from the mid-sixties to under 63%.  .

And six percent of them are unemployed, which means that the actual share of the population that’s working is more like this:

That’s the labor force participation rate minus the unemployed.  Now, if there were an economic recovery going on, that number would be ticking back up. 

LIBRELLE:  Hah, Hah, Hah, Merg!  You’ve been watching too much Faux News!   (Goes back to blowing on the windmill, spinning the blades madly)

BERG: That’s pronounced “foh”, not “fowks”.

LIBRELLE:  Standard pronunciation is a microaggression of the patriarchy!  Anyway – you lie.  The labor force participation rate is dropping because Baby Boomers are retiring!  Hah!

BERG:  That’s a great theory – because statistics show that older people are working less, and that hours and productivity are ticking up among people in their prime working years.

LIBRELLE:  Hah!  Got that right! (LIBRELLE blows on the windmill some more)

BERG:  Except that both of those statements are untrue.  Neither is actually the case. 

Older workers are the only group of workers who are actually increasing their share of the workforce:

And the “inactivity rate” of men between the ages of 25 and 54 – the prime income-earning years – is double what it was during the Reagan Administration…

…and a good third above what it was under Dubya.  And since the “end” of the recession, it’s just kept climbing. 

LIBRELLE:  So you admit you lied to me?

BERG:  Huh?

LIBRELLE: By saying that the stats said one thing, and then showing that they said another!

BERG:  Uh…right.

LIBRELLE:  (Resumes blowing on windmill)

BERG:  What are you doing?

LIBRELLE:  My car ran out of battery.  I’m trying to give it a sustainable jump start. 

BERG:  With a…

LIBRELLE:  With a Personal Wind Generator. 

BERG:   Er…where…

LIBRELLE:  I got it at Sharpened Image.  It was $499. 

BERG:  Don’t you mean “Sharper Image?” 

LIBRELLE:  No. Sharpened.  It’s from Nigeria. 

BERG:  Huh.  Have a great week.

LIBRELLE continues blowing on windmill as BERG walks to his car. 

And SCENE. 

18 thoughts on “Hunky Dory

  1. I will argue with the workforce participation numbers, because they are showing a lot of things all at once. First of all, workforce participation among those of working age did decline rapidly 2007-2011 during the worst part of this Depression. And many people have not gotten jobs in the last three years, so that effect is still with us.
    But here’s the thing about the 1.5% decrease in workforce participation by males in their prime working years – it pretty much matches the increase in stay at home dads, which is 500k:
    http://www.pewsocialtrends.org/2014/06/05/growing-number-of-dads-home-with-the-kids/
    So I’ll chalk this up to Family Values, thank you.
    As for the unemployment rate – yes, you are right. The more comprehensive U6 is now at 11.9% – it’s come down, but it’s still terrible. The headline or U3 rate is a total joke.

  2. Ya know, Erik, betcha that there were more stay at home dads during the Depression, too. If you read your own link, you will see that those new stay at home dads are more likely to be there because of illness/disability (35%) or inability to find a job (23%) than because of “family values” (21%).

    Next time, you might try actually READING your own sources…..

  3. Bubba, meet Erik. He’a pretty sharp guy.

    Erik , meet Bubba. Also a pretty sharp guy.

    Keep it clean.

    Erik: I’d be interested in seeing how much of the “stay at home dad” number is related to economics, and what if anything the relative drop in income was among those families.

  4. Erik’s link actually has half the answer, but part of the answer is hidden in the methodology; what is the “primary” reason for the choice? And how do we define a stay at home dad? It’s worth noting that the Census Bureau only lists a tenth of the amount. The trouble with that methodology is that there is always at least a second significant reason behind that.

    But if we take the numbers at face value, it appears that “family” went from about 55,000 to about 460,000 from 1989 to 2012, “can’t find work” went from ~170,000 to 500,000 in the same period, “disability” went from ~600,000 to ~770,000 in the same time period, and the remainder went from ~280k to 490k or so.

    So it does, to be fair, look like the numbers indicate some degree of “family values” involved, perhaps about a third of the overall effect…..at least until one asks “what is the second reason?” If we infer that it is becoming more socially acceptable–changing mores and all–to be a stay at home dad, then we would infer that a large portion of the increase Erik is pointing to is actually…..

    ….what would have been called “can’t find a good job” back in 1989, when it was less socially acceptable to be a stay at home dad.

  5. It makes little sense to give up working and voluntarily become a stay-at-home dad at a time when family wealth is collapsing.

  6. My son-in-law is an electrician. He was laid off when construction collapsed in 2008 so his wife took a retail clerk job until he could find work. They didn’t plan for him to become a stay-at-home Dad, it just happened.

    When jobs for burly men are replaced by jobs for part-time women, families improvise, adapt and overcome. That doesn’t mean the unemployment rate is good.

  7. It would be interesting to see labor force participation plotted vs. the share of profits going to labor. If jobs on offer are not especially attractive from a compensation standpoint, it’s not surprising that we see marginal workers choosing to be stay at home parents, go to school, work sporadically, or find a way to claim disability.

  8. No profits go to labor.

    Profits are what’s left after labor is paid, also materials, taxes, interest, fees . . . .

    Profits are how the owner gets paid, after everyone else has been paid.

    People who run a small business know that. Liberals, on the other hand . . . .

  9. In classical economics, wages drop until you have full employment and the market clears. Obviously that isn’t happening. I can think of several reasons why that may be.
    Emery, you may be looking for causation in a correlation. Anemic economic growth causes many problems. Small businesses don’t start or can’t grow, and small businesses are the most likely to hire new employees. Established firms demand profit growth even in a stagnant economy with flat revenue, so they try to increase efficiency and make more money per existing employee.

  10. Joe Doakes gets the economics correct.

    So Emery, if the business loses money (the opposite of profits), do the employees pay the owner?

    If you agree to work for me for $10 per hour, why do you feel exploited if I end up making money by selling services, or even your labor to another? You and I agreed that $10 per hour was fair. If you didn’t think it was fair, you would not have agreed to it. If I end up losing money, you still expect to get your $10 per hour. How is it rational that I bear all the risks, but you want to reap the rewards?

  11. One thing I ought to add about Erik’s link; the 400,000 increase in the number of people reporting “family values” is over 23 years, not four or six, so it is extremely unlikely that this plays “the” major role in this, even if the Pareto rule is violated and “can’t find a job” was not a strong #2 reason for most of them.

    One thing that is correct about Emery’s comment is that if wages are depressed because most government set-asides go to those big enough to pay lobbyists–and that is exactly the case–then that, and greatly reduced enforcement of eligibility rules for disability and such will tend to have ever larger numbers of people say “why bother?”.

  12. The Fed and the government needs to take their damn thumbs off of the economy. it will be brutal but that is the only way to get people working again.

  13. Ya know Emery, when you add up the dum total of your contributions here, I’m left to conclude that more than ignorant, you’re just creepy.

    Sorry, but there it is.

  14. Pingback: Fear Of A Dumb Planet | Shot in the Dark

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