The first decade of the 21st century is behind us. Now is a good time to take stock of things and look into the state of the economy. Perhaps the most important aspect of the economy is employment. So just how is the U.S. doing one decade into the new century, in terms of employment?
Basics First: Population and Civilian Labor Force
The labor force is drawn from the civilian population. So the first thing to look at is the U.S. Population Level. For employment purposes, economists are interested in people over 16 because most young people under 16 attend school and haven’t entered the workforce. On 12/2009 this number stood at 236.9 million. The total population is estimated to be about 308.5 million. So about 76.8% of the population is considered old enough to work. Notice that the population grows at a fairly steady pace. It works out to about 0.9% per year.
Next up is a chart of the Civilian Labor Force. This number further excludes people over 65, people that are institutionalized (in prison, mental hospitals) and the military. It also excludes people that are out of the labor force. This includes so-called discouraged workers–folks that have given up looking for a job. On 12/2009 the Civilian Labor Force stands at 153.1 million.
Labor Force Participation Rate and Employment Rate
Notice that the civilian labor force has recently decreased from about 155 million to 153 million. Obviously the population has increased. What happened? Two million people dropped out of the workforce. Those workers haven’t died or left the county. Nope. They just don’t think they can find jobs so have stopped looking Maybe you’ve seen them? The panhandler on the street you pass by each day could be one of these lost workers. So the participation rate dropped down to to 64.6% These low levels have not been seen in more than 20 years.
The result is the absolute number of people employed in this country has dropped dramatically. On 12/2009 the employment level was just 137.8 million, down from a peak of about 146 million a couple of years ago.
Lost Decade for Jobs
The number of people employed at the end of 2009 was at about the same level as it was back 2003 and also back in 2000. For this reason, many people are calling the 2000s the lost decade for jobs in America.
Naturally, the population has increased since a decade ago since it grows just under 1% per year. Comparing Dec-2009 with Dec-1999, you can see the population over 16 increased by 13%, but the employment level only increased by 2%. The percentage of the population that holds jobs is down from 64% to 58% over the decade.
(numbers is thousands)
Indicator Dec-09 Dec-99 Growth
Population Level,>16 236,924 208,832 1.13
LFPR 64.6% 67.1%
Civilian Labor Force 153,059 140,177 1.09
Employment Level 137,792 134,523 1.02
Employment-Population Ratio 58.2% 64.4%
Desired Employment Level 152,579
Jobs Deficit 14,787
If we had the same 64.4% Employment-Population Ratio as a decade ago, with the increased population there would be 152,579 thousand jobs instead of only 137,792 thousand jobs. This is a job deficit of about 14.8 million. Let’s call it 15 million new jobs that need to be created just to get back to even with 1999.
The chart of the Civilian Employment-Population Ratio, Seasonally-Adjusted shows how much employment has dropped during this decade.
Less Meaningful Statistic: U-3 Unemployment Rate
The statistic you hear most often on television is the Unemployment Rate, known as U-3. But U-3 doesn’t count any workers that are not part of the civilian labor force. Politicians like to focus on U-3 because it paints a rosier picture. It dates back to John F. Kennedy’s administration, a President who hated seeing high unemployment figures. So the Bureau of Labor Statistics (BLS) came up with a friendlier statistic.
But U-3 is misleading. For example, the Dec-2009 jobs report from BLS showed that there were 81,000 fewer jobs. Yet the U-3 Unemployment Rate was unchanged from the previous month at 10.0% because many discouraged workers gave up looking for a job and were not counted as part of the labor force.
Knowledgeable citizens are not be fooled by U-3. Instead they look at U-6 which includes discouraged workers, part-time workers and other people that are under-employed. At the end of 2009, U-6 Unemployment Rate was 17.1% This is closer to the reality that people have noticed.
State of U.S. Employment
The situation for workers in the U.S. is grim. While there should have been 15 million new jobs created, the past decade has seen essentially zero job creation in the United States,. One of the biggest factors is globalization, which has made it possible to outsource millions of jobs to foreign workers in countries like China and India.
Charts courtesy of Economagic.com
