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US Unemployment: Good news or bad news?

Regarding the unemployment information in this thread ...

  • This is good news (I lean right)

    Votes: 0 0.0%
  • This is bad news (I lean left)

    Votes: 0 0.0%
  • This is bad news (I'm a centrist)

    Votes: 0 0.0%

  • Total voters
    26
  • Poll closed .

Ockham

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AP said:
WASHINGTON (AP) -- U.S. employers added a solid 223,000 jobs in June, and the unemployment rate fell to 5.3 percent, a seven-year low. But wages failed to budge, and other barometers of the job market paint a mixed picture. The unemployment rate fell from 5.5 percent in May, the Labor Department said Thursday. But the rate fell mostly because many people out of work gave up on their job searches and were no longer counted as unemployed. In addition, the percentage of Americans working or looking for work fell to a 38-year low, a possible sign of more discouraged job seekers. And employers added 60,000 fewer jobs in April and May combined than the government had previously estimated.


The figures capture the persistently uneven nature of the job market's recovery from the Great Recession. More people had begun looking for work in May, yet all those gains were reversed in June. And wages, which had shown signs of finally rising earlier this year, have now stalled.
News from The Associated Press


CSN said:
(CNSNews.com) - A record 93,626,000 Americans 16 or older did not participate in the nation’s labor force in June, as the labor force participation rate dropped to 62.6 percent, a 38-year low, according to the Bureau of Labor Statistics.

In June, according to BLS, the nation’s civilian noninstitutional population, consisting of all people 16 or older who were not in the military or an institution, hit 250,663,000. Of those, 157,037,000 participated in the labor force by either holding a job or actively seeking one.


Record 93,626,000 Americans Not in Labor Force; Participation Rate Declines to 62.6%


So is this good news, bad news, mediocre news or something else?
 

Interesting thread. It motivated me to look up some articles on the labor participation rate because it isn't something I think about too often. I thought the following was an informative article on the subject:

"The US labor force participation rate has fallen by about three percentage points since the Great Recession. Of that decline, Barclays thinks two points are due to population aging. The rest it blames on less participation within various age groups. Now overall, the US still has participation rates higher than Germany, Japan, and UK — the other large, advanced economies Barclays examines in a new report. But US participation dropped a lot more than those nations between 2005 and 2014. And it has particularly dropped a lot for working-age Americans versus that age group in other nations.

The difference is more notable among women:

The most jarring nugget was that only the US saw a decline in the prime working-age female participation over the two last decades. …

US female participation peaked in the mid-90′s and has since been trending downwards, while in Germany, Japan, and the UK the rate continued to inch higher."

There's Low Labor Force Participation Because Long Term Unemployment Has Risen - Forbes
 

I am loathe to put much stock into Labor Force Participation because it addresses everyone not in the workforce equally without looking into their reasons. For example, someone who has retired at the age of 60, someone who is completely discouraged from looking for a job, and someone who is a hippie with zero desire to ever work are all treated the exact same.

Instead, if you wish to look into individuals that have dropped out of the labor force temporarily because they are discouraged, but have expressed a desire to resume looking for work in the future, I would suggest looking at the U6 unemployment rate.

That rate dropped from 10.8% to 10.5% in the most recent jobs report.

Table A-15. Alternative measures of labor underutilization

The only reason that I hesitated on calling this report mediocre (even though I ultimately selected positive) is because of the wage stagnation.
 
Interesting thread. It motivated me to look up some articles on the labor participation rate because it isn't something I think about too often. I thought the following was an informative article on the subject:

"The US labor force participation rate has fallen by about three percentage points since the Great Recession. Of that decline, Barclays thinks two points are due to population aging. The rest it blames on less participation within various age groups. Now overall, the US still has participation rates higher than Germany, Japan, and UK — the other large, advanced economies Barclays examines in a new report. But US participation dropped a lot more than those nations between 2005 and 2014. And it has particularly dropped a lot for working-age Americans versus that age group in other nations.

The difference is more notable among women:

The most jarring nugget was that only the US saw a decline in the prime working-age female participation over the two last decades. …

US female participation peaked in the mid-90′s and has since been trending downwards, while in Germany, Japan, and the UK the rate continued to inch higher."

There's Low Labor Force Participation Because Long Term Unemployment Has Risen - Forbes
Yeah, but have they accounted for population increasing, not just aging? Our population is on the rise.
 
It's also in my humble view that we need unemployment. Corporations need someway to increase their production somehow. With technology, that is going to change everything, but if everyone is employed hypothetically production is at maximum. Then what?

If you are looking at the system as a whole, you want some people unemployed so that they can be employed to increase production. What the exact amount is I don't know. I just wanted to put that out there for consideration.
 
4 million boomers are retiring every year so of course the labor participation rate is going to fall. That's a good thing in every possible way for the younger generation. Over 200,000 people got jobs in May. Using the participation rate to attack the steady improvement in the labor situation is sort of like looking at a line score of a baseball game and giving the win to the team with the most hits, not the most runs.
 
I suspect this is good news - of a kind - and probably the stuff we should get used to hearing in "good times". The problem of the next fifty years will be what to do with an economy where large numbers of people are simply not needed to work in that same economy. When we went from an agrarian economy to an industrial economy there was an increase in jobs - in the USA so much so that we had to import tens of millions of new workers to fill that need. There were no loss of jobs - but rather a gain in jobs and wages.

Transitioning from an industry economy to a service and technological economy leaves large numbers of people behind.

Today, we have to face reality that the guy with an IQ of 85 who got home from WW2 or Korea and got a union job in a factory and lived a solid middle class life for the next forty years is simply not going to be the scenario for people today. Today, if that same person can say welcome to walk mart or do you want fried with that order and make minimum wage for thirty hours a week -= that is the new reality for tens of millions. And you cannot live that same solid middle class life on that sort of existence.

So get used to these monthly reports just like this one. Its only going to get worse over the next decade or two and three until we face the changing realities and adapt to them.
 
If you are looking at the system as a whole, you want some people unemployed so that they can be employed to increase production. What the exact amount is I don't know. I just wanted to put that out there for consideration.

There's something left out of your calculation. Who's going to employ the people who are let go because of increased production? The companies that are inefficient? They wouldn't seem to be a good long term employment bet. It would seem that the economy would need growth in the number of new businesses that get created when there's a consumer base with enough income to support that growth. That takes us to income. One of the things that's missing in our recovery is a healthy growth in income. So the business world is somehow managing to thrive with fewer workers who are not seeing the benefits of corresponding increase in income. That sort of destroys the idea that everyone, owners and workers, should benefit proportionately in a healthy economy. I'm referring, of course, to the third-world level of income and wealth disparity in this country today.
 
So get used to these monthly reports just like this one. Its only going to get worse over the next decade or two and three until we face the changing realities and adapt to them.

While I agree with almost everything you wrote above that quote, I think your conclusion overlooks what a lot of habitual critics of this economy avoid mentioning: the voluntary removal from the work force of about 4 million boomers retiring per year. With our low birth rate, we're going to see a decrease in the working age population over the next few decades which might be offset by the ability of businesses to improve productivity. But to do that we need to have workers who are well educated/trained to do the types of jobs the future economy needs. Many job openings even go unfilled today because employers are not finding the type of skilled workers they need. This country is behind on providing an educational system that provides that education and training. We're still using an idea born in the 19th century that all kids have to go through the same educational pipeline instead of beginning at the earliest of school ages trying to sort kids out by inclination and talents to an education that they can use.
 
While I agree with almost everything you wrote above that quote, I think your conclusion overlooks what a lot of habitual critics of this economy avoid mentioning: the voluntary removal from the work force of about 4 million boomers retiring per year. With our low birth rate, we're going to see a decrease in the working age population over the next few decades which might be offset by the ability of businesses to improve productivity. But to do that we need to have workers who are well educated/trained to do the types of jobs the future economy needs. Many job openings even go unfilled today because employers are not finding the type of skilled workers they need. This country is behind on providing an educational system that provides that education and training. We're still using an idea born in the 19th century that all kids have to go through the same educational pipeline instead of beginning at the earliest of school ages trying to sort kids out by inclination and talents to an education that they can use.

I agree with much that you wrote here. And having spent 33 years in education - I can tell you conclusively that we badly need to regear much of what we do particularly for the non-college bound student.
 
Yeah, but have they accounted for population increasing, not just aging? Our population is on the rise.

We have about 4 million births and 3.5 million deaths. So that's an net population increase of 500,000 yearly. Four million more people are now voluntarily leaving the workforce annually due to boomer retirement which will continue for at least another 10 years. Yes, our total population is increasing slightly but our workforce is shrinking rapidly (and the adequately trained workforce is already too small to meet the needs of employers today).
 

Good news...labor force participation has been dropping for a long time, before Obama took office. It's the aging of our population. The financial hit and sluggish economy has accelerated the trend but the labor force participation the country had when boomers where of working age and before people started living longer and going to school longer isn't going to be the norm anymore.

Overall, we're adding jobs which is a positive.

As for wages, job growth has to happen before wages start going up. That's to be expected
 
I suspect this is good news - of a kind - and probably the stuff we should get used to hearing in "good times". The problem of the next fifty years will be what to do with an economy where large numbers of people are simply not needed to work in that same economy. When we went from an agrarian economy to an industrial economy there was an increase in jobs - in the USA so much so that we had to import tens of millions of new workers to fill that need. There were no loss of jobs - but rather a gain in jobs and wages.

Transitioning from an industry economy to a service and technological economy leaves large numbers of people behind.

Today, we have to face reality that the guy with an IQ of 85 who got home from WW2 or Korea and got a union job in a factory and lived a solid middle class life for the next forty years is simply not going to be the scenario for people today. Today, if that same person can say welcome to walk mart or do you want fried with that order and make minimum wage for thirty hours a week -= that is the new reality for tens of millions. And you cannot live that same solid middle class life on that sort of existence.

So get used to these monthly reports just like this one. Its only going to get worse over the next decade or two and three until we face the changing realities and adapt to them.
Exactly!

Most of those middle-class manufacturing jobs are never coming back - they provided the back-bone of the post war economic boom that continued (of sorts) through the decades.

Only now unfortunately, a growing segment of our economy is 'finance', rather than manufacturing - and where finance had traditionally 'greased the wheels of capitalism' by acting as a catalyst for economic production 'adding' to the economic system, it now is often a parasitic profit center of it's own, 'removing' capital from the economic system. Paper profits redistribute capital, but do nothing to increase production!

This was the Bain Capital/Mitt Romney business model popularized in the '80's: Break companies up, sell pieces off, ship jobs out, and scoop-up the (paper) profits while adding nothing in physicality, capital, or production. In other words, nothing real that can be 'touched' is added, but financial capital is removed.

To see a quite different use of the financial markets, look to China, where factories & physical plants (along with an astronomically growing consumer economy) are sprouting-up overnight, turning villages into towns and towns into cities, empowering & transforming citizens who previously had little, into market-driven consumers renting apartments in new high-rises, buying condos & new cars, and driving their consumer market resultant of the dollars their manufacturing concerns are raking in from the American consumer.

There's plenty of new things you can 'touch', there!
 
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Good news...labor force participation has been dropping for a long time, before Obama took office. It's the aging of our population. The financial hit and sluggish economy has accelerated the trend but the labor force participation the country had when boomers where of working age and before people started living longer and going to school longer isn't going to be the norm anymore.

Overall, we're adding jobs which is a positive.

As for wages, job growth has to happen before wages start going up. That's to be expected

Dude, get a clue. Boomers didn't officially turn 65 until 2011. So all these retirements LONG BEFORE OBAMA weren't boomers. And so plenty of boomers are still working. And with the retirement age increasing that's also affected.
 
I agree with much that you wrote here. And having spent 33 years in education - I can tell you conclusively that we badly need to regear much of what we do particularly for the non-college bound student.
Fair enough.

But 're-gear' to what?

There's little manufacturing done in the U.S. today, so that leaves providing services to each other.

I suppose there's always room for construction workers or mechanics, though. (but construction work is very cyclical)
 
It is mixed news.

It is good to see month after month of jobs growth, and it is good to see official reported unemployment continue downward.

What is not so good is wages growth and rate has not moved, labor force participation rate at a low not seen since 1977, what is called "prime age participation rate" at 88% (on a 5 year skid,) we are on pace to add some 2.5 million jobs this year where as for 2014 we added 3.15 million jobs, and overall the 3rd and 4th income quintiles are still not recovered to 2007-2008 levels.

Like most jobs reports over this lackluster recovery every positive aspect is in company with some very negative undertones on our economic model.
 
Exactly!

Most of those middle-class manufacturing jobs are never coming back - they provided the back-bone of the post war economic boom that continued (of sorts) through the decades.

Only now unfortunately, a growing segment of our economy is 'finance', rather than manufacturing - and where finance had traditionally 'greased the wheels of capitalism' by acting as a catalyst for economic production 'adding' to the economic system, it now is often a parasitic profit center of it's own, 'removing' capital from the economic system. Paper profits redistribute capital, but do nothing to increase production!

This was the Bain Capital/Mitt Romney business model popularized in the '80's: Break companies up, sell pieces off, ship jobs out, and scoop-up the (paper) profits while adding nothing in physicality, capital, or production. In other words, nothing real that can be 'touched' is added, but financial capital is removed.

To see a quite different use of the financial markets, look to China, where factories & physical plants (along with an astronomically growing consumer economy) are sprouting-up overnight, turning villages into towns and towns into cities, empowering & transforming citizens who previously had little, into market-driven consumers renting apartments in new high-rises, buying condos & new cars, and driving their consumer market resultant of the dollars their manufacturing concerns are raking in from the American consumer.

There's plenty of new things you can 'touch', there!

You cannot pay first world wages to produce third world products.
 
Dude, get a clue. Boomers didn't officially turn 65 until 2011. So all these retirements LONG BEFORE OBAMA weren't boomers. And so plenty of boomers are still working. And with the retirement age increasing that's also affected.

The aging of our population is just magnified by the the boomers. As people live longer, the percentage of our population beyond their working years grows.
This graph should give you a good indication how the US demographics have changed
Calculated Risk: U.S. Population Distribution by Age, 1950 through 2050
even before the boomers retired

when you look at the age 25 to 55 demographic...which is a large chunk of your working aged population, labor force participation dropped 0.2% between 2002 and 2012.

Honestly, this stuff is all on the internet and it's been talked about sooo many times.
 
Mediocre news.

It's good that the unemployment rate is decreasing, but there is never going to be a time when unemployment hits a certain number, and we can say "okay, that's good enough." The fact that some people are unable to find work is completely unacceptable, and serious action needs to be taken to address the problem. The idea that we should encourage businesses to hire people by cutting their taxes is incredibly naïve. There is no guarantee to ensure that the money acquired from a reduced tax rate will go towards new jobs. Employers actually need to held accountable to reducing the issue of unemployment: the workweek needs to be reduced to 35 hours with full compensation so that employers must hire more employees. The government also needs to establish public works programs that anyone off the street can work for in order to address the problem head on. The ideal unemployment rate is 0% and every able-bodied adult should have a right to a job.
 
The aging of our population is just magnified by the the boomers. As people live longer, the percentage of our population beyond their working years grows.
This graph should give you a good indication how the US demographics have changed
Calculated Risk: U.S. Population Distribution by Age, 1950 through 2050
even before the boomers retired

when you look at the age 25 to 55 demographic...which is a large chunk of your working aged population, labor force participation dropped 0.2% between 2002 and 2012.

Honestly, this stuff is all on the internet and it's been talked about sooo many times.

Yeah it's been overdiscussed. Many graphs have been shown, but yet few feel better about the economy. There's a reason for that. It's smoke, and people smell the stink. Believe what you like.
 
Yeah it's been overdiscussed. Many graphs have been shown, but yet few feel better about the economy. There's a reason for that. It's smoke, and people smell the stink. Believe what you like.

consumer confidence has increased dramatically since 2009 and are nearing pre-recession levels.

Consumer confidence improved further in June, following a modest gain in May,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Over the past two months, consumers have grown more confident about the current state of business and employment conditions. In addition, they are now more optimistic about the near-term future, although sentiment regarding income prospects is little changed. Overall, consumers are in considerably better spirits and their renewed optimism could lead to a greater willingness to spend in the near-term.”
Another Gain in Consumer Confidence - dshort - Advisor Perspectives
 
I am loathe to put much stock into Labor Force Participation because it addresses everyone not in the workforce equally without looking into their reasons.

Exactly. If the number includes people that busted their asses and saved for their whole lives so they could retire at 60 then it's a silly number. Why on earth is it a bad thing?

It also includes instances like stay at home parents, where one person works and their spouse stays home to care for the kids/house. That's their choice, and I don't see why we should freak out that they don't technically have a job.
 
Good news...labor force participation has been dropping for a long time, before Obama took office. It's the aging of our population. The financial hit and sluggish economy has accelerated the trend but the labor force participation the country had when boomers where of working age and before people started living longer and going to school longer isn't going to be the norm anymore.

Overall, we're adding jobs which is a positive.

As for wages, job growth has to happen before wages start going up. That's to be expected

What? Are you making the claim that the boomers started leaving the workforce "a long time before Obama took office"? The baby boom started in 1946. Those people didn't turn 65 until 2 years after Obama took office.
 
Mediocre news.

It's good that the unemployment rate is decreasing, but there is never going to be a time when unemployment hits a certain number, and we can say "okay, that's good enough." The fact that some people are unable to find work is completely unacceptable, and serious action needs to be taken to address the problem. The idea that we should encourage businesses to hire people by cutting their taxes is incredibly naïve. There is no guarantee to ensure that the money acquired from a reduced tax rate will go towards new jobs. Employers actually need to held accountable to reducing the issue of unemployment: the workweek needs to be reduced to 35 hours with full compensation so that employers must hire more employees. The government also needs to establish public works programs that anyone off the street can work for in order to address the problem head on. The ideal unemployment rate is 0% and every able-bodied adult should have a right to a job.

I actually agree with some of what you say here. Not all though. I disagree with the 35 hour work week idea. That won't happen.
 
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