"It profits me but little that a vigilant authority always protects the tranquillity of my pleasures and constantly averts all dangers from my path, without my care or concern, if this same authority is the absolute master of my liberty and my life."

--Alexis de Tocqueville, Democracy in America

Thursday, February 16, 2012

The Economy and Employment

The Bureau of Labor Statistics, the source for the unemployment figures you see the first Friday of every month, has a lot of interesting ways to look at employment in the U.S. with the click of a button.  

For instance, one of the problems with thinking about unemployment figures is that the percentages depend on who is counted as being part of the labor force; if more people drop out of the labor force by stopping looking for work, the unemployment figure will go down, even though there aren't really more people working.  

Similarly, simply to keep pace with population growth, the economy has to add hundreds of thousands of jobs a month -- by way of example, the civilian noninstitutional population in January 2002 was 216 million, today it is 242 million, which means that in the last ten years the country has added 26 million people.   If 60% of those people are seeking work, that means we needed to add nearly 16 million jobs in 10 years just to keep pace, or about 130,000 per month.  

One statistic that allows you to understand what's happening in the economy while ignoring the vagaries of the "labor force" and correcting for population growth is the employment to population ratio -- perhaps the simplest statistic, simply what percentage of people have jobs.   If you look at this statistic, you see that any talk about how the economy is rebounding is just spin from politicians (read: Obama) who are trying to snow you:

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