Archive for the ‘Employment’ Category

Structural Unemployment in the U.S.

September 27, 2013

In the past, I have focused on unemployment rates and duration of unemployment.

This time I’m going to dig a little deeper and explore what appears to be an emerging structural unemployment based on three basic ideas:

1.  Employment population ratios over time.

2.  Productivity.

3.  The implications of automation.

First a picture showing the trend in employment population and productivity.

Here, I’m using the employment population ratio rather than the unemployment rates in all their permutations because it gives a more realistic picture of how many people are employed compared to the entire population.

Data are from the U.S. Bureau of Labor Statistics.

Employment population ratio vs output per hour-US-1948 to 2012The first thing you notice is that the crossover in the trends was around the year 2000.  The second thing is that these are long and persistent trends, so it appears that one cannot chalk the cause up to current political persuasions or cultural mood at any point in time.

Keep in mind this is U.S. data only, so it doesn’t show what is happening in any other country, and it doesn’t take into account any other sociopolitical structures or cultural mindsets of other developed nations.

Now, I’m going to switch gears and present a set of hypotheses.  These are not new ideas, but I think they are worth spelling out.

  • Political persuasions have little or no effect on the long-term trends.
  • Productivity is not strongly related to the number of people in the labor force as a proportion of the population.
  • Productivity is a function of increasing automation.
  • As the proportion of people in the labor force declines, purchasing power declines.
  • As automation increases, demand will decline (because there are fewer jobs)
  • As demand declines, the need for more output declines.
  • Neither neo-liberal nor Keynesian nor Marxian economic policy can alter the trends.
  • Unless there is some new way of distributing goods, income and wealth, the system will become self-limiting.
  • Neither the rich nor the poor will be immune to this trend.

Now, I want to introduce you to a remarkable book written by a young man (a Millennial) called Robots will Steal your Job, but that’s OK .  The book is online and he keeps adding material and you can get on his mailing list when he finishes each chapter.

Here is a snippet from the introduction:

You are about to become obsolete. You think you are special, unique, and that whatever it is that you are doing is impossible to replace. You are wrong. As we speak, millions of algorithms created by computer scientists are frantically running on servers all over the world, with one sole purpose: do whatever humans can do, but better. These algorithms are intelligent computer programs, permeating the substrate of our society. They make financial decisions, they predict the weather, they predict which countries will wage war next. Soon, there will be little left for us to do: machines will take over.

Start with this introduction, and the left sidebar will guide you through the contents chapter by chapter. The book is well-researched and well-written.

He also has a TEDx video if you are interested. Robots will Steal your Job


Duration Of Unemployment in the United States 1948 to 2011

December 28, 2010


The latest data for mean and median weeks unemployed has been published by the U.S. Bureau of Labor Statistics, which included the month of June, 2011.

This time, I decided to do the graph on a 3-month moving average rather than on an annual basis.  Even with the moving average, the graph is a little jagged looking, but it is more sensitive to individual time periods.

As usual, if you want a larger image, just click on the graph.

Weeks unemployed002


Although the most often cited unemployment statistic is the unemployment rate (in all it’s versions), the statistic that concerns me much more is the duration that someone is unemployed.

It’s possible to remain unemployed until unemployment insurance runs out, and there have been extensions to that time. My concern is that there is a limit to how many times these extensions can be made, and that the lower standard of living can result in the U.S. becoming a third world country. Production will decline, social insurance of all kinds will decline and general measures of social health, including physical health will decline.

The longer someone is unemployed, the lower the general morale will become. In an upcoming post, I hope to show the symptoms of this declining morale and the results may bring to the country.

So, consider this graph that runs from 1948 to 2010. In the past the only measure was the mean (average) number of weeks unemployed, but in 1967 BLS began recording the median number of weeks unemployed. The median is the number at which half the population is below that rate and half the population is above that rate.

Putting Unemployment in Perspective: 1929 to 2009

December 4, 2009

Most of the graphs you see showing the U.S. unemployment rate are short term trends.  A few of them go back as far as 1948, but I wanted to go back to the Great Depression and put these trends in perspective.

Below is a graph of the unemployment rate from 1929 to 2009.  I estimated the end point of 2009 to be 10%.  The most current Bureau of Labor Statistics report shows a drop from 10.2% to 10.0% from October, 2009 to November, 2009.  But it is a bit dicey whether it will finally end up less or increase yet again.

A note of caution:  Methods of computing the unemployment rate have changed over time.  But in my view, the adjustments in methods do not distort the magnitude of the Great Depression.

So, here is the long view.

Just to put this in terms of how real people were affected by this upheaval, here are some pictures of what it looked like then.  The one below is a bread line. The pictures are from the Library of Congress.

And here is a famous picture by Dorothea Lange of migrant farm workers.  The woman on the right is the one from the famous picture of a mother and child.  She cropped it from this picture and enlarged it.

Unemployment Update- October 2009

October 22, 2009

The following graphs update the employment picture I posted in July, 2009 (see earlier post below).

There are two graphs:

The duration of unemployment in median weeks (half the people were jobless  less than 18.1 weeks and half were jobless for more than 18.1 weeks as of the end of September, 2009.)

The mean (average) at the end of September, 2009 was 26.2 weeks.  Nearly always, the mean is greater than the median, especially when the distribution is weighted toward the larger numbers.  Without knowing the actual distribution of numbers, it is fairly safe to say that with such a large difference between the mean and median, the median is a fairly conservative number.

The unemployment rate is also a fairly conservative number, since “discouraged workers” don’t show up in this statistic.  The Bureau of Labor Statistics has a series of alternative measures of unemployment, which include part-time workers, those who left the labor force entirely after long periods of unemployment, or who ran out of unemployment insurance benefits.  It is also possible to get data on those who were out of work, couldn’t get a job, turned 62 years of age, and simply retired on Social Security.

So, given those caveats, here are the two graphs.  Each series runs from July, 1967 to September, 2009.

First, the unemployment rate trend, which was 9.8% at the end of September, 2009.

Unemployment Rate Jul1967 to Sep2009

And then the median duration of unemployment in weeks, which was 18.1 weeks at the end of September, 2009.

Median Weeks of Unemployment Jul1967 to Sep 2009

Since last June, the picture hasn’t changed very much, except that the numbers continued to rise.  Look back at the July post and you can see how the upward trend has continued, with no noticeable slowing of the curve.

Looking at the duration of unemployment in terms of the length of a year, it looks like this:

  • Median duration of unemployment (18.1 weeks) is 34.8% of a year
  • Mean duration of unemployment (26.2 weeks) is 50.4% of a year.

So, we are fairly safe in assuming that a large proportion of the workforce is unemployed between a third of a year and half a year.  The magnitude of these job losses will be covered in the next post.
Source:   Bureau of Labor Statistics

Unemployment Trends in the U.S., 1967 to 2009

July 7, 2009

The Federal Reserve Bank of St. Louis has some new numbers out issued in early July, 2009. Here are some graphs of them. The sources for these numbers were the Department of Labor and the Bureau of Census.

Median Weeks Unemployed
This first graph shows the median weeks of unemployment from 1967 to 2009.

Source: Federal Reserve Bank of St. Louis, via Dept. of Labor

Source: Federal Reserve Bank of St. Louis, via Dept. of Labour

Main peaks during the period July, 1967 through June, 2009 were as follows:
NOTE:  These were peaks that exceeded 1.5 standard deviations above the average through the period.

Nov 1982 through Aug 1983 – Average, 10.68 weeks
Oct 1994 – Average, 10.0 weeks
Jun 2002 – Average, 11.0 weeks
Apr 2003 through Jun 2004 – Average, 10.31 weeks
Jun 2008 through Jun 2009 – Average, 11.42 weeks
Greatest peak, Jun 2009 – 17.90 weeks

Job Loss Claims
The next graph shows the weekly job loss claims for the same period.

Source: Federal Reserve, St Louis via Bureau of Labor Statistics

Source: Federal Researve, St Louis via Bureau of Labor Statistics

Job loss claims exceeded 1.5 standard deviations above the 42-year average during these periods:
Dec 1974 to Jun 1975 – Average, 524,458 (~six months)
Apr 1980 to Sep 1980 – Average, 565,228 (~five months)
Oct 1981 to Mar 1983 – Average, 562,912 (~17 months)
Mar 1991 to Apr 1991 – Average, 496,813 (~ two months)
Oct 2001 to Oct 2001 – Average, 489,250 (~one month)
Nov 2008 to Jun 2009 – Average, 593,934 (~ 7 months and counting)
Maximum: 674,250 on Oct 09, 1982
Minimum: 179, 000 on May 17, 1969