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The widely published unemployment number only measures the dynamics of layoffs (how many people became unemployed in the window of the past 6 months). The actu

by jazzyk 9y ago

The widely published unemployment number only measures the dynamics of layoffs (how many people became unemployed in the window of the past 6 months). The actual labor force participation is what counts. And therein lies the answer to the "why isn't pay rising" question: http://www.tradingeconomics.com/united-states/labor-force-participation-rate http://www.tradingeconomics.com/united-states/labor-force-pa... (switch to the 10-year time view)

AngrySkillzz 9y ago
U-3 is the commonly published "unemployment rate," aka the thing that is currently 4.4%. I don't think many people actually looks at U-1. You can get a better picture by looking at U-5 or U-6 together with the participation rate (LFPR).
- jazzyk 9y ago
  Edited my comment to remove the U1, U3 reference, not to confuse everyone. The point still stands, though.
alistairSH 9y ago
How does a declining labor force participation explain stagnant wages? As participation (supply) goes down, wages should start to go up (to entice people back into the labor force). What we have is declining participation AND stagnant wages.
- jazzyk 9y ago
  Hint: they are forced to "not participate", because there are no jobs for them, not because they don't want to work.
- candiodari 9y ago
  So you are saying you actually agree with the FED's assessment ? It essentially states that anyone who doesn't find a job in 6 months therefore isn't looking for a job. If you don't agree with that, then there aren't any good stats, hence the use of the labor participation number, as the "default" goto for unemployment. If you want alternatives, may I recommend: https://www.bls.gov/news.release/empsit.t15.htm https://www.bls.gov/news.release/empsit.t15.htm This does suggest that U-5 at least is a more realistic figure, or perhaps the average of U-5 + U-6. That would make real unemployment somewhere between 6 and 7.8, and indicates plenty of slack in the labor force.

by jazzyk 9y ago

AngrySkillzz 9y ago

U-3 is the commonly published "unemployment rate," aka the thing that is currently 4.4%. I don't think many people actually looks at U-1. You can get a better picture by looking at U-5 or U-6 together with the participation rate (LFPR).

jazzyk 9y ago
Edited my comment to remove the U1, U3 reference, not to confuse everyone. The point still stands, though.

alistairSH 9y ago

How does a declining labor force participation explain stagnant wages? As participation (supply) goes down, wages should start to go up (to entice people back into the labor force). What we have is declining participation AND stagnant wages.

jazzyk 9y ago
Hint: they are forced to "not participate", because there are no jobs for them, not because they don't want to work.
candiodari 9y ago
So you are saying you actually agree with the FED's assessment ? It essentially states that anyone who doesn't find a job in 6 months therefore isn't looking for a job. If you don't agree with that, then there aren't any good stats, hence the use of the labor participation number, as the "default" goto for unemployment. If you want alternatives, may I recommend: https://www.bls.gov/news.release/empsit.t15.htm https://www.bls.gov/news.release/empsit.t15.htm This does suggest that U-5 at least is a more realistic figure, or perhaps the average of U-5 + U-6. That would make real unemployment somewhere between 6 and 7.8, and indicates plenty of slack in the labor force.