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Unemployment rate might be the most important indicator politically, but it really is the wrong one for most of the things we care about. What it tells you is

Unemployment rate might be the most important indicator politically, but it really is the wrong one for most of the things we care about. What it tells you is (mostly) how much unemployment will be paid out and (to some extent) how available workers are. Anyway, "healthy" unemployment rate is usually 4%-7%. The "right" metric is "employment rate," which is not the inverse. This is just the people working out of the working age population. It doesn't care whether people are unemployed, unable to work, retired, students, stay at home parents... Just how many people work. This is usually around 60%-70%. ...so obviously "unemployed" leaves out the vast majority of non workers. If you want to compare one area to another, for example, compare employment rates. Worried about techno-"unemployment," monitor employment rates. Slower, steadier societal effects will show here.

rockinghigh 9y ago
This metric is called the labor force participation rate. It's currently at 63%. The Bureau of Labor Statistics publishes the times series since 1948: https://data.bls.gov/timeseries/LNS11300000 https://data.bls.gov/timeseries/LNS11300000
- dbatten 9y ago
  Not quite. Labor force participation counts those that are employed or _want_ to be employed...
  - dalbasal 9y ago
    OECD countries compared in the link. You can toggle to participation rate or some other variant. https://data.oecd.org/emp/employment-rate.htm https://data.oecd.org/emp/employment-rate.htm
protonimitate 9y ago
Is there any metric that includes a "livable employment rate"? I.e. does employment count if you aren't making enough to get by on? With the growing class divide and inflation, how much does being employed matter if you need two or three jobs to get by?
- kaycebasques 9y ago
  Perhaps you could infer it by looking at the number of people that are working 2 or more jobs? If that data exists...
  - adventured 9y ago
    The BLS does indeed provide that data. The total number of multiple job holders is at 8.1 million, representing 5.2% of the total persons employed. As a percentage that's approximately where it was in 2006-2007 before the great recession. The peak during the great recession period was around 5.5%. That figure has climbed slightly year over year, from 7.980 million to 8.130 million. That might imply slight stress in the labor market, in terms of cost vs wages, but nothing significant yet. It also might indicate there are some good paying side jobs that have become available due to the labor scarcity and people are snapping them up to improve their financial situation. The coming year will be interesting, as to whether the much anticipated wage growth finally shows up, or whether we're trapped in a Japan debt box of perpetual low inflation and low wage growth despite very low unemployment.
    - refurb 9y ago
      Is that multiple jobs at the same time or just more than one job in a given year? Curious how they count it.
      - adventured 9y ago
        It's more than one job at the same time, during the measured period of time. The BLS routinely polls for why as well. Typically it's about 1/3 say it's to earn more money, 1/3 say it's specifically to deal with debt, and ~15% will say it's for enjoyment (they like the second job). Multi-job holding peaked (all-time high) in 1995 at around 6.8%.
- edanm 9y ago
  How would you measure that? "Enough to get by on" is very different in different situations (single, family, young, old, etc).
Gibbon1 9y ago
It's incredibly dumb for anyone to fixate on the unemployment rate as a long term metric. Because it's really a measure of employment 'churn' So employment churn is at historically low rates really. And this is good exactly why? Especially since the population to employment ratio hasn't changed at all since the great recession. This means you have a very non dynamic employment situation going on. That's actually not good and the Fed's preferred fix, having businesses fire a few percent of the workforce isn't a fix at all.
- dalbasal 9y ago
  Politicians and journalists like it because it's fast moving, and tends to reflect (amplify even) recent economic changes. ...I think it does (depending on local "accounting' quirks) tend to reflect how long it takes to find work. But for that, why not measure that directly, or churn directly.
- mywittyname 9y ago
  Churn goes up as unemployment goes down. People leave for higher paying jobs as employers need to compete on wage for worker.
- greeneggs 9y ago
  > Because it's [the unemployment rate] really a measure of employment 'churn' This is not accurate. Almost the opposite is true. More people switch jobs when unemployment is low. > So employment churn is at historically low rates really. This is also not accurate. The US government measures job churn---it is called the Job Openings and Labor Turnover Survey (JOLTS)---and it is as high as it has ever been. https://www.bls.gov/charts/job-openings-and-labor-turnover/opening-hire-seps-rates.htm https://www.bls.gov/charts/job-openings-and-labor-turnover/o...
- Retra 9y ago
  Unemployment metrics usually focus on people who are employable and willing but unable to find work for extended periods of time. People who are switching jobs do not fall into this category.
russdill 9y ago
These changes in the past of been a pendulum. I don't think the current changes are. Increasing automation, AI, etc, are vastly increasing the productivity of the individual worker and replacing jobs. For a long time there's been an excellent well balanced feedback loop, more productivity = higher pay, higher pay = more purchasing power, more purchasing power = more production needed = more employment. However, wages are starting to stagnate. It could actually be one of the reasons we are getting such high employment. The feedback loop will stop. We as a society will need to decide what to do when it no longer makes sense to employ most people.
- maxerickson 9y ago
  Wages have been stagnant for a long time. You can almost trace it back to when Volcker broke the back of inflation. That's one thing that makes the current posture of the Fed pretty interesting.
  - refurb 9y ago
    Wages might have been stagnant, but total compensation including benefits has not.
    - pmiller2 9y ago
      Does this still hold when health insurance is factored out?
      - refurb 9y ago
        I'm guessing it changes it considerably. In other words, total comp is going up, but much of it is being funneled towards ever more expensive healthcare. However, for business, the cost is just as real as giving employees a higher salary.
        astura 9y ago
        The cost is lower because employer paid premiums for health insurance are tax exempt. That being said, it ends up as a tax on dual income households, I don't get paid more if I opt out of my employer's health insurance even though it saves them a significant amount of money (~$5,000 a year). That's at the employer's discretion but in my experience most employers don't come close to matching compensation.

rockinghigh 9y ago

This metric is called the labor force participation rate. It's currently at 63%. The Bureau of Labor Statistics publishes the times series since 1948: https://data.bls.gov/timeseries/LNS11300000 https://data.bls.gov/timeseries/LNS11300000

dbatten 9y ago
Not quite. Labor force participation counts those that are employed or _want_ to be employed...
- dalbasal 9y ago
  OECD countries compared in the link. You can toggle to participation rate or some other variant. https://data.oecd.org/emp/employment-rate.htm https://data.oecd.org/emp/employment-rate.htm

protonimitate 9y ago

Is there any metric that includes a "livable employment rate"? I.e. does employment count if you aren't making enough to get by on? With the growing class divide and inflation, how much does being employed matter if you need two or three jobs to get by?

kaycebasques 9y ago
Perhaps you could infer it by looking at the number of people that are working 2 or more jobs? If that data exists...
- adventured 9y ago
  The BLS does indeed provide that data. The total number of multiple job holders is at 8.1 million, representing 5.2% of the total persons employed. As a percentage that's approximately where it was in 2006-2007 before the great recession. The peak during the great recession period was around 5.5%. That figure has climbed slightly year over year, from 7.980 million to 8.130 million. That might imply slight stress in the labor market, in terms of cost vs wages, but nothing significant yet. It also might indicate there are some good paying side jobs that have become available due to the labor scarcity and people are snapping them up to improve their financial situation. The coming year will be interesting, as to whether the much anticipated wage growth finally shows up, or whether we're trapped in a Japan debt box of perpetual low inflation and low wage growth despite very low unemployment.
  - refurb 9y ago
    Is that multiple jobs at the same time or just more than one job in a given year? Curious how they count it.
    - adventured 9y ago
      It's more than one job at the same time, during the measured period of time. The BLS routinely polls for why as well. Typically it's about 1/3 say it's to earn more money, 1/3 say it's specifically to deal with debt, and ~15% will say it's for enjoyment (they like the second job). Multi-job holding peaked (all-time high) in 1995 at around 6.8%.
edanm 9y ago
How would you measure that? "Enough to get by on" is very different in different situations (single, family, young, old, etc).

Gibbon1 9y ago

It's incredibly dumb for anyone to fixate on the unemployment rate as a long term metric. Because it's really a measure of employment 'churn' So employment churn is at historically low rates really. And this is good exactly why? Especially since the population to employment ratio hasn't changed at all since the great recession. This means you have a very non dynamic employment situation going on. That's actually not good and the Fed's preferred fix, having businesses fire a few percent of the workforce isn't a fix at all.

dalbasal 9y ago
Politicians and journalists like it because it's fast moving, and tends to reflect (amplify even) recent economic changes. ...I think it does (depending on local "accounting' quirks) tend to reflect how long it takes to find work. But for that, why not measure that directly, or churn directly.
mywittyname 9y ago
Churn goes up as unemployment goes down. People leave for higher paying jobs as employers need to compete on wage for worker.
greeneggs 9y ago
> Because it's [the unemployment rate] really a measure of employment 'churn' This is not accurate. Almost the opposite is true. More people switch jobs when unemployment is low. > So employment churn is at historically low rates really. This is also not accurate. The US government measures job churn---it is called the Job Openings and Labor Turnover Survey (JOLTS)---and it is as high as it has ever been. https://www.bls.gov/charts/job-openings-and-labor-turnover/opening-hire-seps-rates.htm https://www.bls.gov/charts/job-openings-and-labor-turnover/o...
Retra 9y ago
Unemployment metrics usually focus on people who are employable and willing but unable to find work for extended periods of time. People who are switching jobs do not fall into this category.

russdill 9y ago

These changes in the past of been a pendulum. I don't think the current changes are. Increasing automation, AI, etc, are vastly increasing the productivity of the individual worker and replacing jobs. For a long time there's been an excellent well balanced feedback loop, more productivity = higher pay, higher pay = more purchasing power, more purchasing power = more production needed = more employment. However, wages are starting to stagnate. It could actually be one of the reasons we are getting such high employment. The feedback loop will stop. We as a society will need to decide what to do when it no longer makes sense to employ most people.

maxerickson 9y ago
Wages have been stagnant for a long time. You can almost trace it back to when Volcker broke the back of inflation. That's one thing that makes the current posture of the Fed pretty interesting.
- refurb 9y ago
  Wages might have been stagnant, but total compensation including benefits has not.
  - pmiller2 9y ago
    Does this still hold when health insurance is factored out?
    - refurb 9y ago
      I'm guessing it changes it considerably. In other words, total comp is going up, but much of it is being funneled towards ever more expensive healthcare. However, for business, the cost is just as real as giving employees a higher salary.
      - astura 9y ago
        The cost is lower because employer paid premiums for health insurance are tax exempt. That being said, it ends up as a tax on dual income households, I don't get paid more if I opt out of my employer's health insurance even though it saves them a significant amount of money (~$5,000 a year). That's at the employer's discretion but in my experience most employers don't come close to matching compensation.