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that graph's axes can make that graph extremely misleading. Isn't the reasoning backwards though? An employment ratio of 50% means more people are looking for

by rtpg 11y ago

that graph's axes can make that graph extremely misleading. Isn't the reasoning backwards though? An employment ratio of 50% means more people are looking for work than if the employment ratio is at 60%, right? I mean if the employment ratio is 100% surely the labor market would be tight right?

roymurdock 11y ago
Labor Force Participation = Labor Force / Working-age Non-institutionalized Population = (Unemployed + Employed) / Working-age Non-institutionalized Population = (People looking for work + People working) / (Anyone who is physically and legally able to work) Decline in LFP means that the labor force (people employed and/or looking for jobs vs. discouraged but otherwise able-bodied workers) is shrinking relative to overall population. This is caused by at least 1 of 2 things. (1) A decrease in the numerator: workers becoming discouraged and leaving the labor force - note that if workers simply shift from being employed to unemployed, the LFP ratio doesn't change. (2) An increase in in the denominator: more working-age, non-institutionalized workers in the overall population. If the LFP is 100% then everyone who is able to work is either employed or actively seeking employment. If the LFP is 50% then 50% of the total population is not actively seeking employment. With the current unemployment rate of 5.3%, this would mean that 44.7% of the total labor force is employed, 5.3% is unemployed but searching, and 50% is content to not work/discouraged. Confusing to say the least, but in the end it's a proxy for the amount of discouraged workers in the total labor force.
- seanmcdirmid 11y ago
  How would baby boomers effect this? Their is a huge bump in the work force that is now rapidly retiring.
  - roymurdock 11y ago
    Annual Growth Rate of Civilian Labor force By Age (2012-2022) [1] --- 55-64: 1.4% 65-75: 5.6% 75 & older: 6.4% --- 16-19: -2.6% 20-24: -1.0% --- 25-54: 0.2% The share of older people in the workforce is growing rapidly (not retiring like they used to), the share of younger people in the workforce is declining, and the share of middle aged workers remains largely flat. [1] http://www.bls.gov/emp/ep_table_304.htm http://www.bls.gov/emp/ep_table_304.htm
  - JamesBarney 11y ago
    Ideally when people use the employment-population ratio they are using the prime age employment-population ratio. This only includes workers age 25-54 which ideally filters out changes due to demographic shifts.

by rtpg 11y ago

roymurdock 11y ago

Labor Force Participation = Labor Force / Working-age Non-institutionalized Population = (Unemployed + Employed) / Working-age Non-institutionalized Population = (People looking for work + People working) / (Anyone who is physically and legally able to work) Decline in LFP means that the labor force (people employed and/or looking for jobs vs. discouraged but otherwise able-bodied workers) is shrinking relative to overall population. This is caused by at least 1 of 2 things. (1) A decrease in the numerator: workers becoming discouraged and leaving the labor force - note that if workers simply shift from being employed to unemployed, the LFP ratio doesn't change. (2) An increase in in the denominator: more working-age, non-institutionalized workers in the overall population. If the LFP is 100% then everyone who is able to work is either employed or actively seeking employment. If the LFP is 50% then 50% of the total population is not actively seeking employment. With the current unemployment rate of 5.3%, this would mean that 44.7% of the total labor force is employed, 5.3% is unemployed but searching, and 50% is content to not work/discouraged. Confusing to say the least, but in the end it's a proxy for the amount of discouraged workers in the total labor force.

seanmcdirmid 11y ago
How would baby boomers effect this? Their is a huge bump in the work force that is now rapidly retiring.
- roymurdock 11y ago
  Annual Growth Rate of Civilian Labor force By Age (2012-2022) [1] --- 55-64: 1.4% 65-75: 5.6% 75 & older: 6.4% --- 16-19: -2.6% 20-24: -1.0% --- 25-54: 0.2% The share of older people in the workforce is growing rapidly (not retiring like they used to), the share of younger people in the workforce is declining, and the share of middle aged workers remains largely flat. [1] http://www.bls.gov/emp/ep_table_304.htm http://www.bls.gov/emp/ep_table_304.htm
- JamesBarney 11y ago
  Ideally when people use the employment-population ratio they are using the prime age employment-population ratio. This only includes workers age 25-54 which ideally filters out changes due to demographic shifts.