Nums: The most worrisome employment number …

Interesting chart in today’s WSJ … I’ve added a few highlights.

Basic point raised in the article: The reported drop in the unemployment rate is masking a more fundamental weakness in the job market.

As we’ve harped before, the employment to population ratio is down about 5 pp from the pre-crisis long-term average … and despite a decline in the unemployment rate, the employment to population ratio has stayed flat over the past couple of years.

The culprits keeping the employment to population ratio low:

  • bona fide unemployment – too few jobs
  • demographics -old folks retiring
  • social programs – extended unemployment
  • faux disability enrollments

Our prior analyses allocate about 1/3 of the drop to demographics, about 1/2 to lack of jobs and the rest to social programs and disability bumps.

 

image

 

Note from the employment to population chart …

1) The 20 year pre-crisis trend …. hovered around 63%.

2) The steady increase during the 1980’s … you know, the Reagan years … more growth, fewer handouts.

3) The similarity in the levels during the Carter and Obama years … coincidence?

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