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2015 Volume Issue 8

Economic Newsletter for the New Millennium

July 10, 2015


Editor
Donald R. Byrne, Ph.D.
dbyrne5628@aol.com


Associate Editor
Edward T. Derbin, MA, MBA
edtitan@aol.com


For a downloadable version, click here


Labor Picture by Age Group 2007-2014.pdf



...a bit more compressed version of same


Labor Picture by Age Group 2007-2014 compressed.pdf




Audio Version of Newsletter --- to follow

The Labor Markets 2007 – 2014: How the Age Groups have made out


The downturn and the subsequent weak recovery has (if you can call it that) left many behind

As we noted in previous newsletters, employment only grew by 258,000 from 2007 through 2014, while the Civilian Noninstitutional Population expanded by 16.1 million. 









1-From 2007-2014 the working age population Civilian Noninstitutional Population grew by 16 milliion while the number of employed grew by 258,000.jpg





Measuring Economic Growth from 2007 – 2014: Jobs; Inflation; and Gross Domestic Product… first up --- JOBS!


There are a multitude of questions surrounding the state of the economy since 2008 including what could be best described as a mild recovery; but we’ll stick with three economic metrics and then wade in a bit deeper on age groups.  For this newsletter article we will focus on jobs (employment/unemployment) and we’ll address inflation and economic growth a bit later.







As we noted on the jobs front, the recovery has been anemic with 258,000 added from 2007 through 2014.  The media often points to 6.4 million jobs added from 2011 through 2014, and the drop in the U-3 Unemployment Rate from 8.9% to 6.2% in that same time frame.  While these are good indicators, they miss the mark in terms of the bigger picture (i.e., the 7.0 million drop in employment from 2007 – 2010 and the 13.3 million people who left the Labor Force in that time).  In particular, the period we will focus on is from 2007 and 2014 and the meager 258,000 jobs added to the employment rolls. We will focus on how the various age groups were affected in that time frame.




2-Between 2011 and 2014 Labor Force grew by 2.3 million while the Civilian Noninstitutional Population - Working age population grew by 8.3 milllion - Marginal LFPR =27.7%.jpg










3-The very low Marginal LFPR Labor Force Participation Rate of 17.4% for 2007-2014 caused it drop from 66% in 2007 to 62.9% in 2014.jpg




As an illustration, consider this:


In 2007, the Labor Force Participation Rate (LFPR) was 66%
 
Labor Force (LF) = 153,124,000 [Employed 146,047,000 + Unemployed 7,078,000)

Civilian Noninstitutional Population (CNP) = 231,867,000

LFPR = LF 153,124,000 / CNP 231,867,000

LFPR = 66.0%


U3 Unemployment Rate = Unemployed (those not employed, seeking employment) / Labor Force

In 2007, the U3 Unemployment Rate was 4.6%  

U3 Unemployment Rate = Unemployed 7,078,000 / Labor Force 153,124,000

U3 Unemployment Rate = 4.6%    



In 2011, the Labor Force Participation Rate (LFPR) was 64.1%  

Labor Force (LF) = 153,617,000 [Employed 139,869,000 + Unemployed 13,747,000)
Civilian Noninstitutional Population (CNP) = 239,618,000  

LFPR = LF 153,617,000 / CNP 239,618,000
LFPR = 64.1%  

U3 Unemployment Rate = Unemployed (those not employed, seeking employment) / Labor Force

In 2011, the U3 Unemployment Rate was 8.9% 

U3 Unemployment Rate = Unemployed 13,747,000 / Labor Force 153,617,000
U3 Unemployment Rate = 8.9%  



In 2014, the Labor Force Participation Rate (LFPR) was 62.9%  

Labor Force (LF) = 155,922,000 [Employed 146,305,000 + Unemployed 9,617,000)
Civilian Noninstitutional Population (CNP) = 247,947,000 

LFPR = LF 155,922,000 / CNP 247,947,000
LFPR = 62.9%  

U3 Unemployment Rate = Unemployed (those not employed, seeking employment) / Labor Force
In 2014, the U3 Unemployment Rate was 6.2%  

U3 Unemployment Rate = Unemployed 9,617,000 / Labor Force 155,922,000
U3 Unemployment Rate = 6.2%  


Now let’s see what it would take to get back to a 2007 Labor Force Participation Rate (LFPR) of 66.0% and 4.6% U3 Unemployment Rate
 

…assuming a Civilian Noninstitutional Population growth rate of 200,000 per month X 12 months X 10 years = 24 million increase from 2014 - 2024  

Labor Force (LF) = 179,593,000 [Employed 171,291,000 + Unemployed 8,301,000) Civilian Noninstitutional Population (CNP) = 271,947,000  

LFPR = LF 179,593,000 / CNP 271,947,000
LFPR = 66.0%  

U3 Unemployment Rate = Unemployed (those not employed, seeking employment) / Labor Force


In 2024, the U3 Unemployment Rate would be 4.6%  

U3 Unemployment Rate = Unemployed 8,301,000 / Labor Force 179,593,000
U3 Unemployment Rate = 4.6%









4-Moving the needle back to 66% LFPR 11 years of 98.7% Marginal Labor Force Partipation Rate = driven by jobs, jobs, jobs.jpg




So in short, we’ve dug ourselves into an enormous hole, one that would require us to grow 25 million jobs over the next 10 years to get us back to pre-recession level Labor Force Participation Rate of 66% and 4.6% unemployment rate.








5-A deteriorating LFPR Labor Force Participation Rate indicates people leaving the labor force EMPLOYED AND UNEMPLOYED and basically giving up on any hope of employment.jpg





So, what were the groups hardest hit by the change in the labor force participation rate?










6-With the exception of the 65+ group and a slight increase in the 55-64 age group, the younger age labor groups have lost significant ground since 2007.jpg









7- Again, the 16-54 Age Group is at a deficit of 4.3 million - considering retirements - Boomers - this problem is amplified even further - you would expect higher LFPR.jpg




So let’s take a look at the underlying data on the various age groups.  Keep in mind that while the population sizes (Civilian Noninstitutional Population and the Labor Force) of the segments have changed over time, it is important to focus on the Labor Force Participation Rate which provides insight into how those segments have been affected by the ongoing economic downturn – at least so far as the labor markets are concerned.   

Age Group: 16 – 24 (2007-2014)
 

While the Civilian Noninstitutional Population has been growing in this segment has grown by 1.3 million from 2007 through 2014, the Labor Force fell by 922,000.  As a result, the Labor Force Participation Rate fell by 4.4%.   

In addition, unemployment rose by 511,000 from 2007 through 2014 and drove the Unemployment Rate from 10.5% to 13.4% (2.9% higher in 2014 than in 2007).  

Lastly, employment fell by 1.4 million from 2007 to 2014, going from 19.9 million down to 18.5 million.  Since employment fell by 1.4 million and the population rose by 1.3 million it stands to reason that the Employment-Population Ratio (Employed / Civilian Noninstitutional Population) also fell; which it did, by 2.6% (from 45.6% to 43.1% --- rounding).









8-16-24 Civilian Noninstitutional Population has risen by more than a million since 2007.jpg










9-Labor Force (Employed + Unemployed) has fallen by about a million from 2007-2014.jpg










10-No surprise the LFPR Labor Force Participation Rate fell and remained lower since 2007 .jpg










11-Unemployment in 2014 was still around 500,000 higher than it was in 2007.jpg









12-U3 Unemployment Rate has risen and fallen since 2007 but it remained higher in 2014 at 13.4% than it was in 2007 at 10.5%.jpg










14-In spite of a higher population, Emploment remains lower in 2014 than 2007.jpg










13-Employment Population Ratio icompares Employment to CNP Civilian Noninstitutional Population it remains quite a bit lower in 2014 43.1% than it was in 2007 45.6%.jpg




Age 25-34 (2007-2014)


While the Civilian Noninstitutional Population went from 39.8 million 41.2 million for a 2.4 million increase, the Labor Force grew by 1.1 million.  The marginal Labor Force Participation Rate (1.1 million / 2.4 million) was only 44.9%.  As a result, the Labor Force Participation Rate fell from 83.3% in 2007 to 81.2% in 2014. 

Unemployment rose by 680,000 from 2007 through 2014 and drove the Unemployment Rate from 4.7% to 6.5% (1.8% higher in 2014 than in 2007).  The unemployed went from 1.5 million to 2.2 million, while the Labor Force went from 33.1 million to 34.2 million. 

Lastly, employment rose by 389,000 from 2007 to 2014, going from 31.6 million up to 40.0 million.  Since employment rose by only 389,000 and the population increased by 2.4 million, the marginal Employment-Population Ratio (Employed / Civilian Noninstitutional Population) was only 16.3%, driving the ratio from 79.5% in 2007 down to 75.9% in 2014 (-3.6% change).









15-Civilian Noninstitutional Population went from 39.8 million in 2007 to 42.1 million in 2014.jpg










16-Labor Force grew by about one million, but not high rate to keep up with the population growth.jpg










17-Deteriorating LFPR Labor Force Participation Rate illustrates the growing problem in the labor markets --- they are simply not rebounding.jpg










18-Unemployment is still higher in 2014 2.2 million than in 2007 1.5 million, but down from a peak of 3.4 million in 2010 --- just not translating into more jobs.jpg










19-U3 Unemployment Rate down from the peak of 10.1 in 2010, but still higher in 2014 6.5% than the 4.7% in 2007.jpg










20-Again Employment has rebounded, but just a bit 2007 31.6 million 2014 32.0 million - not enough to absorb the unemployed and new entrants.jpg










21-Employment Population Ratio 25-34 group down quite a bit from 2007 79.5% to 2014 75.9% - not a good thing.jpg



Age 35-44 (2007-2014)

The Civilian Noninstitutional Population went from 42.4 million down to 39.6 million for a 2.8 million decrease and the Labor Force fell by 3.0 million from 35.5 million in 2007 to 32.5 million in 2014.  The Labor Force Participation Rate went down 1.6% from 83.8% in 2007 to 82.2% in 2014. 

Unemployment rose by 314,000 from 2007 through 2014 and drove the Unemployment Rate from 3.4% to 4.7% (1.3% higher in 2014 than in 2007).  The unemployed went from 1.2 million to 1.5 million, while the Labor Force went from 35.5 million to 32.5 million. 

Finally, the Employment-Population Ratio (Employed / Civilian Noninstitutional Population) went from 80.9% in 2007 down to 78.3% in 2014 (-2.6% change).









22-CNP for the 35-44 Age Group down by more than 2 million from 2007 - tail end of the boomers (1946-1964) moving on to the next age bracket.jpg










23-Labor Force (Employed + Unemployed) has fallen by about a 3 million from 2007-2014.jpg










24-Deteriorating LFPR Labor Force Participation Rate illustrates the growing problem in the labor markets --- they are simply not rebounding in the younger age groups.jpg










25- Unemployment for the 35-44 age group has fallen quite a bit, but it is still higher in 2014 1.5 million than it was in 2007 1.2 million.jpg










26-U3 Unemployment Rate is higher in 2014 4.7% than in 2007 3.4%.jpg










27-Employment is much lower in 2014 than in 2007 some having to do with a shift in the population --- tail end of the Baby Boom moving out of the age group.jpg










28-The deteriorating Employment-Population Ratio does not bode well for a key working age group in the population.jpg



Age 45-54 (2007-2014)  

The Civilian Noninstitutional Population went from 43.5 million down to 42.8 million for a 729,000 decrease and the Labor Force fell by 1.6 million from 35.7 million in 2007 to 34.1 million in 2014.  The Labor Force Participation Rate went down 2.4% from 82.0% in 2007 to 79.6% in 2014.   

Unemployment rose by 314,000 from 2007 through 2014 and drove the Unemployment Rate from 3.4% to 4.7% (1.3% higher in 2014 than in 2007).  The unemployed went from 1.2 million to 1.5 million, while the Labor Force went from 35.5 million to 32.5 million. 

Finally, the Employment-Population Ratio (Employed / Civilian Noninstitutional Population) went from 80.9% in 2007 down to 78.3% in 2014 (-2.6% change).









29-The Civilian Noninstitutional Populatoin includes those 16+ years of age not in the military, incarcerated, or otherwise listed in an institution.jpg










30-The Labor Force consists of those Employed + those Unemployed actively seeking employment.jpg










31-the Labor Force Participation Rate fell from 82% in 2007 to 79.6% in 2014 - again, this has significant impact on people in their prime income earning years.jpg










32-Unemployment levels are higher in 2014 1.5 milion than they were in 2007 1.1 million.jpg










33- 4.4% Unemployment Rate in 2014 is 1.2% higher than the 3.2% rate in 2007 for the 45-54 year old age group.jpg











34-Employment is down in the 45-54 year old segment.jpg











35-When we compare ratios - Employment Population Ratio in this case, we can realy see where the problems begin showing up with the age groups.jpg



Age 55-64 (2007-2014)


The Civilian Noninstitutional Population went from 32.5 million up to 39.8 million for a 7.2 million increase and the Labor Force rose by 4.8 million from 20.7 million in 2007 to 25.5 million in 2014.  The Labor Force Participation Rate increased 0.35% from 63.8% in 2007 to 64.1% in 2014.   

Unemployment rose by 465,000 from 2007 through 2014, driving up the Unemployment Rate from 3.1% to 4.3% (1.2% higher in 2014 than in 2007).  The unemployed went from 642,000 million to 1.1 million, and the employed went from 20.1 million to 24.4 million for a 4.3 million increase.  The adds to the Employed and the Unemployed resulted in the Labor Force going from 20.7 million to 25.5 million (+465,000 Unemployed +4.3 million Employed = 4.8).   

Finally, the Employment-Population Ratio (Employed / Civilian Noninstitutional Population) went from 61.8% in 2007 down to 61.3% in 2014 (-0.5% change).









36-CNP on the rise - Boomers.jpg











37-Labor Force grew just enough to keep up with the population up tick.jpg











38-LFPR was slightly higher in 2014 64.1% than in 2007 63.8% --- people remaining in the Labor Force longer than before --- tougher to retire perhaps.jpg











41-Unemployment levels are higher in 2014 1.1 milion than they were in 2007 642,000.jpg










42- 4.3% Unemployment Rate in 2014 is 1.2% higher than the 3.1% rate in 2007 for the 55-64 year old age group.jpg










43-Employment on the rise as working Boomers move through the age group.jpg










40-In spite of the slightly higher LFPR the lower Employment Popuation Ratio signals that Unemployment is up in the age group.jpg



Age 65+ (2007-2014)


The Civilian Noninstitutional Population went from 36.2 million up to 45.0 million for an 8.8 million increase and the Labor Force rose by 2.6 million from 5.8 million in 2007 to 8.4 million in 2014.  The Labor Force Participation Rate increased 2.6% from 16.0% in 2007 to 18.6% in 2014. 

Unemployment rose by 197,000 from 2007 through 2014, driving up the Unemployment Rate from 3.3% to 4.6% (1.3% higher in 2014 than in 2007).  The unemployed went from 190,000 to 387,000, and the employed went from 5.6 million to 8.0 million for a 2.4 million increase.  The adds to the Employed and the Unemployed resulted in the Labor Force going from 5.8 million to 8.4 million (+197,000 Unemployed +2.4 million Employed = 2.6).   

Finally, the Employment-Population Ratio (Employed / Civilian Noninstitutional Population) went from 15.5% in 2007 up to 17.7% in 2014 (+2.2% change).









44-CNP on the rise in the 65+ group as Boomer (1946-1964) roll in.jpg










45-Labor Force on the rise in 65+ age group.jpg










46-Labor Force Participation Rate in the 65+ year old group on the rise up 2.6% since 2007 working longer out of necessity or desire hmmm.jpg











47-Unemployed levels remain high for the age group.jpg














48-Unemployment Rate still fairly high indicating that increasing desire to keep working in the 65+ age group.jpg











49-Employed higher in the 65+ year old group.jpg











50-Employment Population Ratio on the rise in the 65+ group - one thought no need to provide health care since they have Medicare - hmmm.jpg