Krugman takes a fresh look at the employment figures the last decade.. as percentage of the whole population… and adjusts them for a growing segment of seniors.. as the relative ratio of work force vs. total population is declining by nature..
And showing that yes.. the employment situation is getting better.. slowly…
These days everyone knows that the unemployment rate is a problematic measure, because it can fall not because more people are working but simply because fewer people are looking for work. (This isn’t what happened in September, but it has been an issue in the recent past). An alternative is therefore to count employment rather than unemployment; one simple measure is the employment-population ratio, which suggests no improvement for years:
But this measure too has problems; it’s the fraction of people 16 and over at work, which means that the denominator includes a rapidly growing number of seniors, who presumably don’t want to keep working. How can we correct for this demographic bias?
One answer, which I’ve used before, is to focus on prime-age adults, between 25 and 54; Calculated Risk did this yesterday, and pointed out that there has been some real improvement over the past year. This is a good quick-and-dirty approach. But it can lead to (false) accusations of cherry-picking, and it also throws out information.
So here’s an arguably better measure: constant-demography employment, which shows what would have happened to the employment-population ratio if the age structure of the population had stayed constant.
For my calculation, I’ve divided the population into three age groups, 16-24, 25-54, and 55 plus, for which employment-population ratios are available in the BLS databases. (Scroll down and use the one-screen data search). I’ve then taken a weighted average of these ratios, where the weights are the 2007 shares of each group in the civilian noninstitutional population. And here’s what you get:
Aha. So there is real if modest improvement over the past year. Also, the September numbers looks not like an aberration but like a return to trend from what looks like noise in the data over the previous couple of months.
This story is, by the way, broadly consistent with the payroll data, from a different survey, which also suggest employment growing somewhat faster than population.
So contra Romney, this is a real recovery. Modest, but real. Unless, of course, you believe that there’s a conspiracy of socialist statisticians …
(Via Paul Krugman)