The October Lesser Depression Jobs Picture: Grim No Matter How You Look at It

By Ron Baiman

Though payroll jobs (establishment survey) increased by 204,000 in October, overall employment (household survey) declined by 735,000, indicating that the U.S. employment situation remains dismal.  More telling, long-term employment of 27 weeks or more remains at 4.1 million, approximately double the level in prior recessions (see: http://www.tcf.org/blog/detail/graph-americas-long-term-unemployment-crisis-continues).  The official unemployment rate also remained essentially unchanged, increasing slightly from 7.2 percent to 7.3 percent.  The more accurate U-6 unemployment rate, which takes into account discouraged workers and workers working part time who would like full-time work, also rose from 13.6 percent to 13.8 percent in October.

In order to understand the long-term picture, especially since the October data is affected by the government shutdown, it is useful to compare the change in employment-to-population (over 16) ratio during the current “Lesser Depression” with all prior post-war recessions. The employment-to-population (E/P) ratio controls for declines in labor force participation during recessions. Figure 1 shows how this ratio changed relative to its value on the official starting month of each post-war recession. Note that E/P never fully recovered from the 2001 recession and has shown almost no improvement in the current “expansion” from the official June 2009 trough of the current Lesser Depression.

Figure 1: Percent change in Employment/Population Ratio from Start of Recession For Post-War Recessions

image1.jpg

Floyd Norris of the New York Times recently showed (11/02/2013) that when controlling for demographic changes (the ratio of 16-24, 25-54, and 55 and over, in the population) there has been some improvement in the E/P ratio, which at least has risen above its lowest value in the 1991 recession (see: http://www.nytimes.com/2013/11/02/business/economy/changes-in-labor-force-mask-improvement-in-jobs-situation.html?_r=0 with accompanying figures: http://www.nytimes.com/interactive/2013/11/01/business/Job-Picture-May-Be-Better-Than-It-Appears.html?ref=economy ).  Norris points out that labor force participation has risen among older workers (the 55-and-over cohort) since the start of the recession in 2007, even as it has declined among younger workers, especially the 16-24 group. But since prime-age workers (26-54) have the highest participation rates, an aging population will cause the E/P ratio to decline even if employment rates by age cohort were constant. Norris’s adjusted figure looks at what E/P ratios would be if earlier populations had the same age cohort shares as today’s population. 

Norris’ figures show a positive trend in “adjusted” E/P ratio after a precipitous drop (to the lowest point in the last 25 years) in 2009, so that recently the ratio climbed above its level in the early 90’s recession. But this comparison to the 1990’s E/P ratio is clouded by the long-term trend of increasing E/P as more women have joined the labor force due to economic and cultural factors since that time.  A more telling comparison would look at recessionary impacts on short-term changes in E/P, specifically from the beginning of a recession. Figure 2 below performs such an analysis (using similar cohort specific E/P ratios, holding population cohort shares to their October 2013 level for all prior years) and shows just how severe job loss in the Lesser Depression has been relative to all prior post-war depressions even after taking population demographic changes into account. Because these are shorter-term comparisons, these specifically recession-related job losses are less clouded by long-term cultural and economic trends in E/P.

Figure 2: Percent change in Employment/Population Ratio from Start of Recession For Post-War Recessions Adjusted for Major Age Cohort Population Changes

image2.jpg

Moreover, it is unclear whether this “adjusted” figure provides the more accurate picture, as the ratio of employed people to total population is a key factor in economic productivity regardless of their relative ages, and a shift toward less relative labor force participation by younger workers (regardless of population demographics) is, as many have pointed out: http://www.nytimes.com/2013/11/08/opinion/krugman-the-mutilated-economy.html), a negative trend both for the future prospects of younger youngers, the retirement prospects of older workers, and for society at large.

However one measures our current economic malaise, and the E/P ratio is one of the best indicators of our condition, we are in a very bad way, and it appears very clear that unaided private sector growth will not provide adequate full employment at living wages any time in the near future. For this, a large-scale federal jobs program -- which could be largely funded by a financial transactions tax -- and equally robust trade and industrial policies will be necessary (see for example: http://www.cpegonline.org/workingpapers/CPEGWP2010-1.pdf ).

Ron Baiman is on the steering committee of Chicago DSA and a member of the Chicago Political Economy Group.

Individually signed posts do not necessarily reflect the views of DSA as an organization or its leadership.

Film Discussion: When Abortion Was Illegal

March 26, 2017
· 12 rsvps

Directed by Dorothy Fadiman, When Abortion Was Illegal (1992, nominated for an Academy Award, Best Documentary Short Subject) reveals through first-person accounts the experiences of women seeking abortion before the Supreme Court legalized abortion in Roe v. Wade in 1973. We are one Supreme Court nominee away from a return in many states to back-alley abortions. Join Amanda Williams, Executive Director of the Lilith Fund, to discuss challenges to reproductive justice and abortion access. (Lilith Fund funds abortions for women in need in the Central and South Texas area.) Learn about how to participate in April Bowl-A-Thons to raise funds for low-income women. View the film here for free before the discussion. 8 ET/7 CT/6 MT/5 PT.

DSA New Member Orientation Call

March 30, 2017
· 36 rsvps

You've joined DSA - Great. Now register for this New Member Orientation call and find out more about our politics and our vision.  And, most importantly, how you can become involved.  9:30 PM ET; 8:30 PM CT; 7:30 PM MT; 6:30 PM PT.

LGBT Activism: A Brief History with Thoughts about the Future

April 01, 2017
· 50 rsvps

Historian John D'Emilio's presentation will do 3 things: Provide a brief explanation of how sexual and gender identities have emerged; provide an overview of the progression of LGBT activism since its origins in the 1950s, highlighting key moments of change; and, finally, suggest what issues, from a democratic socialist perspective, deserve prioritizing now. John co-authored Intimate Matters: A History of Sexuality in America, which was quoted by Supreme Court Justice Anthony Kennedy in the 2003 Lawrence v. Texas decision that ruled state sodomy laws unconstitutional. 1 pm ET; 12 pm CT; 11 am MT; 10 am PT.

  1. This webinar is free for any DSA member in good standing.
  2. You need a computer with good internet access.
  3. Your computer must have headphones (preferred) or speakers; you can speak thru a mic or use chat to "speak".
  4. If you have questions, contact Peg Strobel, peg.strobel@sbcglobal.net.
  5. If you have technical questions, contact Tony Schmitt, schmittaj@gmail.com, 608-355-6568.

Film Discussion: Documentaries of People's History in Texas

April 02, 2017
· 30 rsvps

Join DSA members Glenn Scott and Richard Croxdale to discuss videos produced by People’s History in Texas (PHIT), a project that brings to life the stories of ordinary people in significant socio-political movements in Texas. They will discuss The Rag, their newest documentary, which tells the story of an influential underground paper based in Austin, Texas, from 1966-77. Click here to view Part I (the early years as an all-volunteer paper covering the student, anti-Vietnam and Civil Rights movements), Part II (the impact of Women’s Liberation on the paper) and Part III (building community: covering local politics, nukes, co-ops, feminist institutions). But also check out the video on the Stand-Ins about a group of university students who led a movement to desegregate Austin’s movie theaters in 1961. 8 ET/7 CT/6 MT/5 PT. Here's a blog post about PHIT.

Introduction to Democratic Socialism

April 04, 2017
· 53 rsvps

Join Rahel Biru, NYC DSA co-chair, and Joseph Schwartz, DSA Vice-Chair, on this webinar for an overview of what we in Democratic Socialists of America mean when we talk about "socialism," "capitalism" and the goals of the socialist movement.  9 PM ET; 8 PM CT; 7 PM MT; 6 PM PT.

  1. This webinar is free for any DSA member in good standing.
  2. You need a computer with good internet access.
  3. Your computer must have headphones (preferred) or speakers; you can speak thru a mic or use chat to "speak".
  4. If you have questions, contact Joseph Schwartz, schwartzjoem@gmail.com.
  5. If you have technical questions, contact Tony Schmitt, schmittaj@gmail.com, 608-355-6568.

Feminist Working Group

April 12, 2017
· 14 rsvps

People of all genders are welcome to join this call to discuss DSA's work on women's and LGBTQ issues, especially in light of the new political reality that we face after the elections.  9 pm ET; 8 pm CT; 7 pm MT; 6 pm PT.

DSA New Member Orientation Call

April 16, 2017
· 6 rsvps

You've joined DSA - Great. Now register for this New Member Orientation call and find out more about our politics and our vision.  And, most importantly, how you can become involved.  8 pm ET; 7 pm CT; 6 pm MT; 5 pm PT.

Film Discussion: The Free State of Jones

June 11, 2017
· 9 rsvps

Join Victoria Bynum, Distinguished Professor Emeritus of History, Texas State University, San Marcos, to discuss The Free State of Jones. STX Entertainment bought the film rights to Bynum's book of the same title. She also served as a consultant and appears in a cameo scene. What was the Free State of Jones? During the Civil War, an armed band of deserters led by Newt Knight, a non-slaveholding white farmer, took to the swamps of southeastern Mississippi and battled against the Confederacy in an uprising popularly known as “The Free State of Jones.” Joining Newt in this rebellion was Rachel, a slave. From their relationship, there developed a controversial mixed-race community that endured long after the Civil War had ended. View the film here for $6 before the discussion. 8 ET/7 CT/6 MT/5 PT.