Opting out of the labor force and does the unemployment rate still matter? Michael W. Horrigan, Ph.D. Associate Commissioner Office of Employment and Unemployment Statistics March 24, 2018 NAWB Pre-conference Session: Labor Market Data Smart Strategies for Workforce Development 1 U.S. BUREAU OF LABOR STATISTICS bls.gov
Opting out of the labor force 2 U.S. BUREAU OF LABOR STATISTICS bls.gov
Current Population Survey (Household Survey) Nationally representative monthly survey of about 60,000 eligible households, including data for about 110,000 people Joint effort between BLS and Census Bureau Broadest measure of employment 3 U.S. BUREAU OF LABOR STATISTICS bls.gov
CPS Sample Design Universe: Civilian noninstitutional population age 16 and over Frame: list of addresses from 2010 Decennial Census of Population, updated for new housing Mode of collection: in person or phone interviews Voluntary survey, 87% response rate 4 U.S. BUREAU OF LABOR STATISTICS bls.gov
CPS Monthly Schedule Sun Mon Tue Wed Thu Fri Sat Survey reference week Survey conducted 12 19 Release day 5 U.S. BUREAU OF LABOR STATISTICS bls.gov
CPS Data Collection 4-8-4 rotation schedule 75% overlap month to month 50% overlap year to year Some items asked every month, others only in certain months 1 2 3 4 5 6 7 8 Outgoing rotation groups 6 U.S. BUREAU OF LABOR STATISTICS bls.gov
CPS concepts Civilian noninstitutional population Civilian labor force Not in the labor force Employed Unemployed Do not want a job now Want a job now 7 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor Force Status of Population, 2017 annual averages Unemployed Want a job Employed Not in the labor force Do not want a job 8 U.S. BUREAU OF LABOR STATISTICS bls.gov
Population and Labor force, 1969 Men Women 75+ 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 16-19 10-15 5-9 0-4 Labor force Not in labor force Baby boomers 12 10 8 6 4 2 0 0 2 4 6 8 10 12 Millions Age Millions 9 U.S. BUREAU OF LABOR STATISTICS bls.gov
Population and Labor force, 1989 Men Labor force Women Not in labor force 75+ 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 16-19 10-15 5-9 0-4 Baby boomers 12 10 8 6 4 2 0 0 2 4 6 8 10 12 Millions Age Millions 10 U.S. BUREAU OF LABOR STATISTICS bls.gov
Population and Labor force, 2009 Men Women 75+ 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 16-19 10-15 5-9 0-4 Labor force Not in labor force Baby boomers 12 10 8 6 4 2 0 0 2 4 6 8 10 12 Millions Age Millions 11 U.S. BUREAU OF LABOR STATISTICS bls.gov
Population and Labor force, 2016 Baby boomers Men Women Population Labor force 75+ 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 16-19 10-15 5-9 0-4 12 10 8 6 4 2 0 0 2 4 6 8 10 12 Millions Age Millions 12 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation rate Seasonally adjusted, 1948-2018 Percent 75.0 73.0 71.0 69.0 67.0 65.0 63.0 61.0 February 2018 Level: 63.0 59.0 57.0 55.0 1948 1951 1955 1958 1962 1965 1969 1972 1976 1979 1983 1986 1990 1993 1997 2000 2004 2007 2011 2014 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 13 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation rate Seasonally adjusted, 1999-2018 Percent 69.0 68.0 67.0 66.0 65.0 64.0 February 2018 Level: 63.0 63.0 62.0 61.0 60.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 14 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor Force Participation: Recent Developments and Future Prospects Stephanie Aaronson, Tomas Cajner, Bruce Fallick, Felix Galbis-Reig, Christopher Smith, and William Wascher Board of Governors of the Federal Reserve System and the Federal Reserve Bank of Cleveland September 2014 Presentation at the Fall 2014 Brookings Panel on Economic Activity 15 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor Force Participation: Recent Developments and Future Prospects The evidence we present in this paper suggests that much of the steep decline in the labor force participation rate since 2007 owes to ongoing structural influences rather than a pronounced cyclical weakness related to the weak state of the labor market. Most prominently, the on-going aging of the baby-boom generation into ages with traditionally lower attachment to the labor force can, by itself account for nearly half of the decline. 16 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation rate of youth by age Seasonally adjusted, 1999-2018 Percent 85.0 20 to 24 years 75.0 65.0 55.0 16 to 19 years 45.0 35.0 25.0 1948 1951 1955 1958 1962 1965 1969 1972 1976 1979 1983 1986 1990 1993 1997 2000 2004 2007 2011 2014 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 17 U.S. BUREAU OF LABOR STATISTICS bls.gov
School enrollment of youth by age October 1985-2016 Percent 90.0 80.0 70.0 School enrollment rate, 16-19 years 60.0 50.0 40.0 30.0 School enrollment rate, 20-24 years 20.0 10.0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Note: October Supplement. Source: Bureau of Labor Statistics, Current Population Survey. 18 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation by school enrollment, ages 16 to 24 years October 1985-2016 Percent 90.0 80.0 70.0 Not enrolled in school 60.0 50.0 40.0 30.0 Enrolled in school 20.0 10.0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Note: October Supplement. Source: Bureau of Labor Statistics, Current Population Survey. 19 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation rates by sex, 55 to 64 years old Not seasonally adjusted, 1948-2018 Percent 100.0 90.0 80.0 70.0 Men, 55 to 64 years 60.0 50.0 40.0 30.0 Women, 55 to 64 years 20.0 10.0 0.0 1948 1951 1955 1958 1962 1965 1969 1972 1976 1979 1983 1986 1990 1993 1997 2000 2004 2007 2011 2014 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 20 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation rates by sex, 65 years and over Not seasonally adjusted, 1948-2018 Percent 60.0 50.0 40.0 30.0 20.0 10.0 Women, 65 years and over Men, 65 years and over 0.0 1948 1951 1955 1958 1962 1965 1969 1972 1976 1979 1983 1986 1990 1993 1997 2000 2004 2007 2011 2014 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 21 U.S. BUREAU OF LABOR STATISTICS bls.gov
Female labor force participation rates, 25 to 54 years old Seasonally adjusted, 1948-2018 Percent 100.0 90.0 80.0 70.0 60.0 50.0 Women, 25 to 54 years old 40.0 30.0 20.0 10.0 0.0 1948 1951 1955 1958 1962 1965 1969 1972 1976 1979 1983 1986 1990 1993 1997 2000 2004 2007 2011 2014 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 22 U.S. BUREAU OF LABOR STATISTICS bls.gov
Male labor force participation rates, 25 to 54 years old Seasonally adjusted, 1948-2018 Percent 100.0 98.0 96.0 94.0 Men, 25 to 54 years old 92.0 90.0 88.0 86.0 84.0 82.0 80.0 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 23 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation rates of men 25 to 54 years old by race and Hispanic or Latino ethnicity Not seasonally adjusted, Nov 1994-2018 Percent 95.0 93.0 91.0 Hispanic men 89.0 87.0 White men 85.0 83.0 Black men 81.0 79.0 77.0 75.0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 24 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation rates for men 25 years and over Not seasonally adjusted, 1992-2018 Percent 90.0 80.0 Bachelor's degree and higher 70.0 60.0 Some college or associate degree High school graduate, no college 50.0 Less than high school diploma 40.0 30.0 20.0 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 25 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation rates of White men 25 to 54 years old by education, annual averages 100.0 95.0 90.0 85.0 80.0 75.0 70.0 Less than high school diploma High school graduate, no college Some college or associate degree Bachelor's degree or higher 1994 2007 2017 Source: Bureau of Labor Statistics, Current Population Survey. 26 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation rates of Black men 25 to 54 years old by education, annual averages 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Less than high school diploma Source: Bureau of Labor Statistics, Current Population Survey. High school graduate, no college 1994 2007 2017 Some college or associate degree Bachelor's degree or higher 27 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor force participation rates of Hispanic men 25 to 54 years old by education, annual averages 98.0 96.0 94.0 92.0 90.0 88.0 86.0 84.0 Less than high school diploma High school graduate, no college Some college or associate degree Bachelor's degree or higher 1994 2007 2017 Source: Bureau of Labor Statistics, Current Population Survey. 28 U.S. BUREAU OF LABOR STATISTICS bls.gov
Longitudinal data perspective The National Longitudinal Surveys program has been following two cohorts of youth since early ages one starting in 1979 and the other in 1997. The cohort that began in 1979 (NLSY79) was ages 14-21 on December 31, 1978 and the cohort that began in 1997 (NLSY97) was ages 12-16 on December 31, 1996. These cohorts are interviewed every year or every two years and a complete event history of their labor force participation (employed, unemployed, out of the labor force) is recorded for every week of their lives. 29 U.S. BUREAU OF LABOR STATISTICS bls.gov
Longitudinal data perspective These very unique data sets allow us to examine the labor force participation of these two cohorts at the same exact ages in this case, the maximum sample overlap is for ages 25-30 The following slides will examine the proportion of each cohort that is employed, unemployed and out of the labor force for each single week between and including the ages 25-30 The NLSY79 cohort were ages 25-30 between 1983 and 1996 The NLSY97 cohort were ages 25-30 between 2006 and 2016 30 U.S. BUREAU OF LABOR STATISTICS bls.gov
Proportion of the men employed each week, ages 25-30, for the NLSY79 and the NLSY97 cohorts Percent 100.0% NLSY79 NLSY97 95.0% 90.0% 85.0% 80.0% 75.0% 70.0% 25 26 27 28 29 30 Note: NLSY79 cohort were ages 25-30 in 1983-1996 NLSY97 cohort were ages 25-30 in 2006-2016 31 U.S. BUREAU OF LABOR STATISTICS bls.gov
Proportion of the men unemployed each week, ages 25-30, for the NLSY79 and the NLSY97 cohorts Percent 10.0% 9.0% NLSY79 NLSY97 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 25 26 27 28 29 30 Note: NLSY79 cohort were ages 25-30 in 1983-1996 NLSY97 cohort were ages 25-30 in 2006-2016 32 U.S. BUREAU OF LABOR STATISTICS bls.gov
Proportion of the men out of the labor force each week, ages 25-30, for the NLSY79 and the NLSY97 cohorts Percent 20.0% 18.0% NLSY79 NLSY97 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 25 26 27 28 29 30 Note: NLSY79 cohort were ages 25-30 in 1983-1996 NLSY97 cohort were ages 25-30 in 2006-2016 33 U.S. BUREAU OF LABOR STATISTICS bls.gov
Does the unemployment rate matter? 34 U.S. BUREAU OF LABOR STATISTICS bls.gov
Does the unemployment rate matter? Nick Wells, CNBC, February 3, 2017 The national unemployment rate rose slightly to 4.8 percent in January, the Labor Department announced Friday. But relying on that one headline number as an indicator of the economy overall ignores important information just below the surface. Economists look past the official unemployment rate that 4.8 percent figure, also known as the U-3 to other metrics that give their own view of jobs in the country. 35 U.S. BUREAU OF LABOR STATISTICS bls.gov
Unemployment Includes people who: Did NOT work during the reference week AND were available for work AND actively searched for work during the prior 4 weeks Also includes people on temporary layoff who may or may not have searched for work 36 U.S. BUREAU OF LABOR STATISTICS bls.gov
Unemployment rate Seasonally adjusted, 1990 2018 Percent 11.0 10.0 9.0 8.0 7.0 6.0 5.0 February 2018 Level: 4.1 4.0 3.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 37 U.S. BUREAU OF LABOR STATISTICS bls.gov
Duration of unemployment Seasonally adjusted, 1990 2018 In thousands 7,000 6,000 5,000 27 weeks and over 4,000 3,000 Less than 5 weeks 2,000 1,000 5 to 14 weeks 15 to 26 weeks 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 38 U.S. BUREAU OF LABOR STATISTICS bls.gov
Long-term unemployed as a percent of total unemployed Seasonally adjusted, 1990 2018 Percent 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 Percent unemployed 27 weeks and over February 2018 Level: 20.7 10.0 5.0 0.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 39 U.S. BUREAU OF LABOR STATISTICS bls.gov
Not in the Labor Force: neither working nor looking for work Want a job Marginally attached Discouraged worker Other marginally attached Other s who want a job Do not want a job 40 U.S. BUREAU OF LABOR STATISTICS bls.gov
Marginally Attached to the Labor Force Want and are available for work AND worked or looked for work in past 12 months BUT are not currently looking for work Discouraged workers subset of the marginally attached who believe: No jobs are available for them They don t qualify for the available jobs 41 U.S. BUREAU OF LABOR STATISTICS bls.gov
People not in the labor force by desire and availability for work (2017 annual averages) Thousands Percent Total not in the labor force 94,759 100.0 People who do not want a job now 89,242 94.2 People who currently want a job 5,518 5.8 Marginally attached (searched for work within past 12 months and available to work now) Reasons not currently looking: Discouragement over job prospects 1,587 1.7 476 0.5 Reasons other than discouragement 1,112 1.2 42 U.S. BUREAU OF LABOR STATISTICS bls.gov
Persons not in the labor force who want a job Seasonally adjusted, 1994 2018 In thousands 8,000 7,000 6,000 5,000 4,000 February 2018 Level: 5.1 million 3,000 2,000 1,000 0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 43 U.S. BUREAU OF LABOR STATISTICS bls.gov
Persons not in the labor force, selected indicators Not seasonally adjusted, 1999-2018 In thousands 3,000 2,500 Marginally attached 2,000 1,500 1,000 500 Discouraged workers 0 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 44 U.S. BUREAU OF LABOR STATISTICS bls.gov
Part-time Workers Worked 1-34 hours Usual hours and actual hours at work Reasons: Economic reasons (involuntary) Slack work Couldn t find full time Seasonal decline in demand Noneconomic reasons (voluntary) Child care problems Own health or disability Other family or personal obligations Others 45 U.S. BUREAU OF LABOR STATISTICS bls.gov
Employed part time for economic reasons Seasonally adjusted, 1999-2018 In thousands 10,000 9,000 8,000 7,000 6,000 Part time for economic reasons, total 5,000 4,000 Slack work 3,000 2,000 1,000 Could only find parttime work 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 46 U.S. BUREAU OF LABOR STATISTICS bls.gov
Labor Underutilization Underemployment Generally people whose labor and/or skills are underutilized in their jobs Not officially defined concept in CPS Part time for economic reasons CPS concept Overqualified workers Not a CPS concept Range of alternative measures of labor underutilization 47 U.S. BUREAU OF LABOR STATISTICS bls.gov
Alternative measures of labor underutilization U-1 Unemployed 15 weeks or longer: labor force U-2 Job losers & completed temp jobs: labor force U-3 Unemployed: labor force (official unemployment rate) U-4 Unemployed + discouraged workers: labor force + discouraged workers U-5 Unemployed + discouraged workers + other marginally attached: labor force + all marginally attached U-6 Unemployed + all marginally attached + employed part time for economic reasons: labor force + all marginally attached 48 U.S. BUREAU OF LABOR STATISTICS bls.gov
Alternative measures of labor underutilization Seasonally adjusted, 1994 2018 Percent 18.0 16.0 U-6 14.0 12.0 10.0 U-5 8.0 6.0 U-5 U-6 U-4 U-4 U-3 4.0 2.0 U-3 Unemployment rate U-1 U-2 0.0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 U-2 U-1 Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Source: Bureau of Labor Statistics, Current Population Survey. 49 U.S. BUREAU OF LABOR STATISTICS bls.gov
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Over-the-year Total Covered Employment Change for the United States: September 2016-2017 54 U.S. BUREAU OF LABOR STATISTICS bls.gov
Over-the-year Total Covered Employment Change for Pennsylvania: September 2016-2017 55 U.S. BUREAU OF LABOR STATISTICS bls.gov