
What Record-Low Unemployment Looks Like in America - adventured
https://www.bloomberg.com/news/features/2018-03-15/this-is-what-record-low-unemployment-looks-like-in-america
======
dalbasal
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.

~~~
protonimitate
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?

~~~
edanm
How would you measure that? "Enough to get by on" is very different in
different situations (single, family, young, old, etc).

~~~
zwieback
Economists usually use the (local) cost of a "basket of goods" to figure that
out. What goes into the basket is a political choice, though.

~~~
edanm
An answer to you and to most of the other comments in this thread:

This isn't what I was getting at. Take for example university students. Their
earning power is significantly smaller than more experienced people. They also
tend to need a lot less money, because they're usually single, don't often
have a mortgage, live in a small apartment or in their parent's house, etc.

Many students work part-time in a restaurant or similar. For them, this will
probably be a "livable wage", whether because their needs are smaller as
discussed, or because they're relying to some extent on their parents.

Take another person of the same age, but who has a family and no parents for
support, and assume they earn the same. For them, this same wage is _not_
livable.

How would you statistically separate these cases? I'm not saying there isn't a
way, I'm just wondering what it is!

------
roymurdock
Kashkari (Presidnet of Minneapolis Fed): "We were at maximum employment. We
are now at maximumer employment."

Michael Lebowitz: "So explain why monetary policy is still in emergency mode.
Funds at 1.25-1.50 and over $4 trln balance sheet."

Kashkari: "I thought the "tongue-in-cheekiness" of my tweet would be obvious.
Allow me to translate: We keep saying we are at max employment and then all
these people choose to work. It suggests we weren't really at max employment."

Reggie Palatty: "Dude I loved you in the Mummy Returns"

Kashkari: "I was better in the original"

[https://twitter.com/neelkashkari/status/972142317162369024](https://twitter.com/neelkashkari/status/972142317162369024)

To take a step back, the official unemployment # is only important in so far
as its in the Federal Reserve's dual mandate to maximize employment while
keeping inflation steady and moderate. Kashkari's comments suggest that we
haven't hit max employment, and that not even high ranking members of the Fed
have a firm grasp on what "max employment" looks like in the contemporary
economy.

Fed wants to wait until we hit "max employment" to begin normalizing, which is
akin to pumping the economic brakes. Normalizing = raising interest rates +
removing bank liquidity = increasing cost and friction of borrowing/loaning =
slows down economic activity.

The real question remains: how will employment and the overall economy change
when the Fed starts to normalize interest rates and reduce the securities
holdings from QE on its balance sheet. In theory it should reduce the rate of
job creation.

More info on normalization here:
[https://www.federalreserve.gov/monetarypolicy/policy-
normali...](https://www.federalreserve.gov/monetarypolicy/policy-
normalization.htm)

------
alex_young
The unemployment rate is still over 8% if you count those who have dropped off
because they haven't found work in 6 or more months.

This measure was well under 7% at our last period of nearly full employment.

[http://www.macrotrends.net/1377/u6-unemployment-
rate](http://www.macrotrends.net/1377/u6-unemployment-rate)

~~~
IncRnd
U-6 unemployment has been trending down not up over the last year.

Looking at specific dates, raw U-6 is .9 less than a year ago. Seasonally
adjusted U-6 is a full point less than a year ago.

[https://www.bls.gov/news.release/empsit.t15.htm](https://www.bls.gov/news.release/empsit.t15.htm)

~~~
Bartweiss
For all the talk about different unemployment rates, U3 - U6 track each other
shockingly closely.

That said, OP's complaint still applies for LFPR or NEET percentage, which as
far as I know are moving opposite U3-6?

~~~
IncRnd
LFPR has been mostly unchanged since the end of 2013.
[https://data.bls.gov/timeseries/LNS11300000](https://data.bls.gov/timeseries/LNS11300000)

I agree, though, the U numbers are basically the definition of "fake news"
from the standpoint of what you mentioned.

------
11thEarlOfMar
I'd like to understand how record employment affects 401k contributions and
thereby, fuels the already heady stock market.

And what's happening with home ownership and real estate prices across the
nation? For example, my development has 115 homes. Zero are for sale, and the
last sale was nearly 1 year ago. There is no inventory.

Does it constitute a virtuous cycle for the economy? Next up, inflation and
increasing interest rates as the fed works to keep the economy from
overheating.

~~~
opportune
I'm pretty sure inflation under these circumstances occurs independently of
further fed intervention, the classical economic theory being that competition
for labor (under low unemployment) drives an increase in salaries
unaccompanied by an increase in productivity, resulting in inflation

~~~
sjg007
Right but traditional inflation fears might be overblown... everything is
basically manufactured in China or other low wage countries now. Food
production is highly mechanized. And most jobs are in the service sector. All
I can think of is that inflation manifests in insurance, healthcare, and
housing costs.

~~~
opportune
Productivity can still be measured in service, although in certain cases
abstractly, but for example a barber is a service worker with pretty
measurable productivity. I think inflation can still occur within the
classical model wrt the service sector. An example being that a restaurant has
trouble keeping dishwasher positions filled, incentivizing them to increase
dishwasher wages, requiring higher menu prices to compensate.

As long as the US continues to maintain a comparative advantage in certain
industries (e.g. software) I see no reason why they will be immune to wage
inflation either. In fact this is arguably already occurring

------
kaycebasques
I skimmed the article, so I may have missed it, but the article doesn’t seem
to mention that official numbers exclude long-term discouraged workers.
Apparently they were removed from official numbers in 1994.

[http://www.shadowstats.com/alternate_data/unemployment-
chart...](http://www.shadowstats.com/alternate_data/unemployment-charts)

~~~
adventured
The US - the BLS - commonly tracks multiple variations of employment. The two
most common are the U3 and U6. They're very well known and easily accessible.
Just punch in "u6 unemployment rate" into Google.

------
danceparty
Can anyone explain how to reconcile this with the massive explosion in
homelessness in SF and LA?

~~~
sgift
Sure: Employment and "has enough money to live" are not the same thing. The
second one is a far more interesting metric, but also far more sober for most
governments, so they don't use it.

~~~
closeparen
I find it hard to imagine that so many people have jobs and live on the street
at the same time. “Working homeless” is a thing but typically means couch
surfing or car camping, not rough sleeping.

------
himom
If both unemployment were low and job satisfaction, it would seem to follow
that opioid abuse would subside due to the fact most people use for escapism.
Perhaps unemployment is low but with shit jobs and/or low pay, people are
still miserable and going to use. The stat of low unemployment therefore maybe
a pyrrhic victory.

~~~
russdill
The national average for unemployment is low. Certain areas are higher, much
much higher.

------
pasbesoin
Lies, damned lies, and statistics.

"Unemployment" has been such a gamed term, especially since the Great
Recession (at least, from my current perspective), that someone would have to
argue me back to believing, to any significant degree, the numbers they are
posting and stories they are telling about same.

~~~
adventured
Well you can easily drill down through the murk, the BLS provides a plethora
of data.

For example, a common criticism about the US employment picture, on sites such
as zerohedge, is to claim that it's all part time work. We have these numbers
however, so there's no need to speculate.

Part-time workers as a percent of the total employed, is at the same level it
was in 1999. Around 17.7%. That rate continued to move lower until mid 2000,
when it hit around 16.7% before the recession.

Employment for 27 weeks or longer (1/2 year or longer), is back to a healthy
level, where it was during the good times in 2005-2006 and matching 1996-1997.
Employment for the other duration periods has seen a similar recovery.

The long-term unemployed as a percentage of the total unemployed, is back to
1995 and 2005 levels.

All the more impressive, these vast improvements are coming down off of an
extreme hammer to the labor market from the great recession. The ~2001-02
recession was a blip by comparison, and yet the labor market has managed to
get back to what would be considered healthy numbers in both the mid 1990s and
mid 2000s. In fact, compared to the 1970s and 1980s, current numbers would be
considered amazing.

And further to the positive side, the benefits of this labor improvement have
been entirely wide-spread. Black, white, asian, hispanic, everyone is seeing a
labor boom.

[https://www.bls.gov/web/empsit/cps_charts.pdf](https://www.bls.gov/web/empsit/cps_charts.pdf)

~~~
pasbesoin
Thank you for taking the time to respond.

As an aside, politically, I'm entirely unwilling to credit this to the last
year. My own prior reading (ok, mostly of news articles, albeit reasonably
well-informed ones), described such effects as typically being a minimum of a
year out from policy initiatives. 18 months being a more typical minimum.

The Great Recession hit me hard, and I've not seen the bounce back. Nor have
others I know in my age bracket (later middle-age). That may color my
perspective.

The country spent years digging out from the last financial disaster. And not
the messaging seems to be, if you didn't grab as much as you could, it's your
own fault.

P.S. And I do recall, a few years ago, the emphasis upon short term
unemployment rates, avoiding discussion of the long-term unemployed and those
who'd, from the perspective of the parameters of the statistical exercise,
exited the labor market.

Thank you for addressing that to some extent. I do wonder, though, within
specific demographics, what the levels of such may continue to be.

Have an upvote. I'm not complaining about your response -- to be clear. :-)

~~~
adventured
> I'm entirely unwilling to credit this to the last year.

I'm in full agreement with that. This is a multi-stage procession of factors
stretching back to 2010-2011. Economies, left well enough to their own and
barring any extreme events, tend to improve/recover naturally.

I also think we're going to need more time to fully recover from the severe
damage that occurred during the great recession. The complex effects and
suffering of that kind of hit are well beyond the headline numbers and should
be expected to take many years to heal. Economists are puzzled by wage growth
not being higher (eg 3.5% vs 2.5% or similar) based on where unemployment is
at - I think it's because we've only just got back to something close to a
healthy labor market, whereas they think we're in the midst of something a
notch or two higher than that already. To recover from economic trauma, it's
not enough to just return to former headline numbers, you actually have to
recover from the psychology damage (as is well known the great depression,
which was of course even worse, left people traumatized for life). People
behave differently after that kind of trauma, they make different choices,
they fear risk more (which can lead to job stagnation, or fear to pursue
better opportunities etc), and so on.

Trump may or may not unleash some so called animal spirits, in his rah rah
behavior and policies (and or harm as much, from strategically poor thinking
on trade), however the economy was grinding this direction likely regardless
of anything the President might do. Very generally speaking, outside of insane
policy settings (eg a corporate tax rate at 70%), if you manage to not
upset/crash an economy for an extended period of time, and otherwise maintain
a reasonable playing field, you'll see amazing economic gains over time
leaving your people to their own pursuits. I regard our challenge right now,
as being to sustain this tight labor market as long as possible to push beyond
mere recovery and into fundamental generational improvement for everyone
(everything from the median wage, to the median net wealth figures, to wages
for blacks and hispanics, to what are considered minimum wage levels, and on
to job benefits). The tight labor market, if sustained long enough, will claw
back some of the share of profit toward labor, and I expect the wage &
benefits increase over time can be considerable given the vast profit levels
in corporate America today. Even if you held wages relatively steady and
increased things like vacation time or maternity leave, it'd be quite an
improvement.

------
zachguo
low unemployment have preceded crises
[https://www.theatlas.com/charts/BJ0j99abM](https://www.theatlas.com/charts/BJ0j99abM)

------
JustAnotherPat
What I gathered from this article is that there isn't enough interest in Maine
made chocolate to cover decent wages. Ship production to China or Mexico like
everyone else. America has become a globalist society, and that means there's
no room for lower middle class jobs like the ones explored in this article.

------
monkmartinez
They just stopped counting the people that don want to work.... and let me
tell you there are a LOT of them. Ask any police officer or firefighter about
apartment complexes full of people who do not want to work, can not work
because drugs, or are on disability.

~~~
dsr_
Specifically, you are looking for various measures of "not in the labor force"
\-- called U1 through U6.

[https://www.bls.gov/news.release/empsit.t15.htm](https://www.bls.gov/news.release/empsit.t15.htm)

U6 is: Total unemployed, plus all persons marginally attached to the labor
force, plus total employed part time for economic reasons, as a percent of the
civilian labor force plus all persons marginally attached to the labor force

The national U6 right now is 9.2 (unadjusted).

~~~
copper_think
It says 8.6 on the page

~~~
protomyth
dsr_ followed the column down a bit off and got the Feb 2017 seasonally
adjusted number (they are one column apart) - they should really separate
those better

------
mnm1
So even with "record-low unemployment", most people still don't make decent,
living wages. At least that's what the article seems to be saying. Salaries
aren't going up significantly. Workers have more choices, but clearly, even at
record-low unemployment, the market fails most workers. That's an interesting
insight as it might lead to more people to question the idiocy of letting
chaos run markets by leaving them unregulated.

~~~
djrogers
> most people still don't make decent, living wages. > the market fails most
> workers.

Neither of those assertions is either in the article, or supported by fact.
The vast majority of workforce members are employed and live well above the
poverty line.

I truly don't understand why there seems to be a belief that every single job
that exists should provide a 'living wage'. There is such as thing as a
starter job, and there types of jobs that don't provide 25-50K/yr in value to
either the employer or market. It's just not reasonable to presume (or enforce
a policy such ) that any amount or type of work a business owner needs done
should automatically result in the employee being completely taken care of.

