Where is the US economy headed?

Here's the overall participation rate, and it doesn't seem to support such a large change in estimate of the job growth needed to hold unemployment steady (to two-thirds of its previous value):



Participation has been increasing since the trough in January 2005, not decreasing (this graph ends at December 2005, but more recent participation figures do not alter the picture - see below). Furthermore, the scale of the graph is deceptive and the overall variation is small. Participation is 66.8% in January 1995 at the beginning of the graph, and 66.2% for the latest available observation for September 2006, only a .6% difference. The peak is 67.3% in January 2000, and the trough is 65.8% in January 2005. Here's a longer term view:

Labor Force Participation Rate


In addition, participation rates for workers over age 55 have been steadily increasing over the last ten to fifteen years offsetting some of the changes due to the changing demographic composition of the labor force toward older workers. See Cyclical and Long-Term Labor Force Participation Rate Changes by Gender, Age, and Education or the data at the BLS web site for more.

WILLIAM RODGERS, Former Chief Economist, Labor Department: Well, as you said, the number of new jobs over this last month came in well below what private-sector forecasters had anticipated, but also, Richard Friedman, my colleague from Harvard and I, we've been studying this labor market since the beginning of the recovery, as defined by the National Bureau of Economic Research, a nonpartisan think-tank out of Cambridge, Massachusetts.

And where they define the beginning of the recovery is November 2001. And when you do that, what you find is that we've only been averaging a little around 100,000 new jobs per month, clearly not enough to be able to absorb those people who have lost their jobs over the recovery.

Or in this past month, where we saw the unemployment rate stay still, but what happened was, people were leaving the labor force because they were having difficulty finding jobs. Again, we need to have 150,000 new jobs, roughly, just to keep our heads above water.

And also, we need to be well above that to be able to absorb young minorities, young people who have graduated from college. And so, again, this report didn't surprise me, because it's consistent with the trends that we've seen since the beginning of this recovery.

And now my colleague from the Hudson Institute, she's going to want to start writing history as beginning in January 2003, the beginning of the tax cuts. And even if you do that, you're still looking at an average job growth per month of about 118,000 new jobs per month, again, well below what we need to really extend opportunity broadly throughout this society.

They have a point. By saddling employers with a personal expense is merely incorporating the cost of personal medical care into the pricing of the products sold by those employers. After all, we do not expect employers to pay for the food we buy or the tires we put on our car. If employers had to pay for everything else we bought for ourselves, can you imagine the effects on business and on the cost of their products? You essentially remove or seriously dampen the benefits you receive from a free enterprise system, when you skew the free market or saddle it with inappropriate burdens.


Walmart has grown into the company it is because people like shopping at Walmart. And nobody has a gun held to their head to make them work at Walmart.


Somehow, we've gotten ourselves into the mindset that employers have to buy health insurance, when it should never have progressed to that. Do your employees expect you to buy their auto insurance?


I think the answer is obviously yes.



Ultimately I think we will go one of two ways, that of government health care, or measures to bring competitive pricing back into the system, which requires the people pay for it themselves. Since I am for freedom and as much personal responsibility as possible, I advocate the latter, while realizing the very poor will need some kind of extra measures to help them with insurance and medical care.

1. As Bush has proposed, we need serious tort reform, which malpractice lawyers seriously oppose, example Democrat John Edwards.

2. We need to give large tax deductions for people purchasing their own health insurance and their own medical care.

3. Perhaps for those people that are so poor or without jobs, perhaps a voucher or something of some sort needs to be set up for people to purchase their own catastrophic health insurance and minor medical care. We have Medicaid now, do we not, for the very poor? Perhaps keep some form of that?

Bottom line, we should want the people that receive the care to pay for the care or to pay for the insurance that pays for the care. This injects competition, which brings more quality, accountability, and efficiency into the system. I assume we all like quality, accountability, and efficiency.

I have paid my own care for many years, by purchasing a good catastrophic insurance plan, and paying for minor medical visits out of my own pocket. Therefore, I choose the doctor I want, and I only go when I am sick with more than a runny nose. When bills arrive, I personally review them, and have personally eliminated more than a thousand dollars or so, by finding charges for services that did not occur, and by offering to pay early and receiving a discount. I have personally experienced more quality, accountability, and efficiency, because of paying for my own health care, either directly or through my insurance policy.

cicerone, take the labor force participation rate of about 2/3 and apply it to the 153,000, and you have 100,000 of your number of people needing jobs already accounted for, just to replace the people retiring from existing jobs each and every month. I wouldn't think these jobs would be classified as new jobs. If they are, then we really do have some screwed up figures for job creation.

The 100,000 jobs mentioned above does not even count the number of people dying before they retire. If I thought it was interesting enough or important enough, I would research it. Bottom line, you need to retract some of your statements about the unemployment rate being so dead wrong.

In one of your posts, a quote says:
"Or in this past month, where we saw the unemployment rate stay still, but what happened was, people were leaving the labor force because they were having difficulty finding jobs."
Where is the evidence for this statement, cicerone? Is this just someone's opinion or is it based on anything?

P.S. Another reason I think the unemployment figures are not so wrong, is that I do not currently know anyone personally that is unemployed. I would count maybe a couple dozen people I am talking about that I know well or are friends. I know more people than that but maybe not well enough to know their current situation. I certainly could not have said that I didn't know anyone unemployed at many points in the past. Virtually everyone I know is doing fairly well, economically. None of them rich, but they all live in decent houses, have enough food, transportation, decent clothes, and are paying their bills as far as I know.

okie, WILLIAM RODGERS, Former Chief Economist of the Labor Department wrote that article. If you think you have better info than the Former Chief Economist, please show it to us.

Your assumption that you know more than the Chief Economist shows how ignorant you are about the US labor.

Well, I may be somewhat ignorant of how their statistics are gathered and what they mean, but I also know that not all economists agree.

http://www.pbs.org/newshour/bb/business/july-dec06/jobs_10-06.html

That interview shows alot of personal opinions based on chosen statistics, cicerone. Proving that if you wish to be a pessimist, you can always find a statistic somewhere to support your view, and vice versa. Bottom line, unemployment remains at fairly low levels, and the economy is doing fairly well, much better than most places in the world. After all, people are beating the door down trying to get here.

And when I look at the friends and acquaintances of mine, they are doing better now than they have ever done in my entire lifetime. I want to be optimistic, that is my tendency, and I get real tired of people bellyachin, when those same people are eating steak, driving new cars, and living in nice homes. And if someone suffers misfortune, there is usually help available, but for many people that are destitute, it is because of irresponsiblie behavior and poor choices. Responsible people are not necessarily rich, but virtually all live a fairly comfortable life.

I quite agree that the economy is doing quite well (for some) and not so well for others. I live in a very middle class working neighborhood of teachers, firemen, policemen, retired folks etc. They are not doing so well and have not kept up with increasing costs of things like utilites, health insurance, fuel prices, food prices etc. Personally the stock market has done just fine for me and my income continues to improve but I don't quite make the equation that because i am doing ok most others (except the lazy ones) are also doing well.

okie, Quit attacking the messenger and challenge his opinion with evidence that can be supported by anything but your own opinion.

William Rodgers is one of the few people in the US who really understands the American labor situation - from first hand knowledge.

Your's is based on - oh yeah, your opinion.

I didn't attack the messenger. I simply pointed out there is a wide disagreement between the opinions of economists. Unfortunately, they mix politics with their views. And I seriously doubt that William Rodgers is one of the few people in the entire country that understand the labor market. I suspect there are hundreds, if not thousands of economists that study this all the time, and I fail to see why he has a lock on all the knowledge. That has to be one of your biggest whoppers, ci. If you read my link, you would have to admit the other person did not agree with him much, and she was an economist as well.

There are economists and there are those that have worked in the Labor Department. Guess which individual has more credibility?

okie, Name one economist that disagrees with William Rodgers' article posted above.

I am not, okie, an agumentative person. I read your last few interactions with ci. But then I read this. Are you serious?

I am totally serious. No need to be politically correct here on this forum. I said, "for many people that are destitute," I did not say "for all people that are destitute." From what little I have gathered about the really destitute, I am talking about homeless mainly, they either have mental problems, drug problems, or alchohol problems. Obviously not all, but a fairly high percentage, a much higher percentage than exists in the general population. Hopefully, you would not wish to call this into question, as I think this is pretty much the fact and can be backed up with statistics if you require it. To break it down further, I believe drug problems and alchohol problems are a personal choice, at least at the outset.

okie, You are misinformed. Those with drug, alcohol or psyhological problems are illnesses like diabetes or cancer. It's not because those people are "lazy," make poor choices, or are irresponsible.


Please get informed about the subject before you make statements that are untrue.

cicerone, I think you are kidding but I can't be sure of it on this forum? Mental problems, I agree. Notice I did not include that, and I advocate helping those people as much as is needed.

Alcoholism and drug problems, no, I think you must be kidding? Either that or you really are way out in left field. Maybe I should also ask you if shoplifters have a disease too? Do burglars have a disease?

Perhaps we should instead go back to this statement of Rogers:
"Or in this past month, where we saw the unemployment rate stay still, but what happened was, people were leaving the labor force because they were having difficulty finding jobs."

My question to you is, what does Rogers claim these people are doing? My personal guess is based on the people I know, which often includes one spouse in a two parent family has either quit a job or gotten laid off, and simply decided not to work for a while for a number of reasons. Reasons range from, they don't need the money, or its better to stay home with the kids by the time you pay for child care, or they quit to have a child, or they decided to retire ..... maybe again. I know people that retired for a while, got tired of sitting around, and went back to work, but then retire again for various and sundry reasons. I think it is over simplifying the situation to say they all quit looking for work because they had difficulty finding jobs.

One thing most economists do have in common, is that they all sort of have a disconnect from the real world and what we out here really think. One thing I have always noticed is that many people think the economy is terrible and the future looks terrible, but when you ask them how they are doing and their friends are doing, the picture becomes much brighter. So I go back to my optimistic view of things. Overall, we are living pretty luxurious here.

That's always true irregardless of the time period of any developed economy. You must understand his opinion as a whole - which includes that one statement. Good try, but not coupie doll.

True, but there are such things as cycles in regard to demographics and many other things that impact the statistics.

okie, The demographics of the US is growing; the baby boomers will be retiring in droves during the next ten to fifteen years.

The US is fortunate in that our age group distribution is better than most developed countries (workers vs retirees).

These simple truths tell us that the demand for jobs in the US increase for the short-term and long-term.

What's your point?

Unless I've missed the bombshell, ci, I still have not seen you post any hard evidence that the unemployment numbers are blatantly wrong. You only post speculation, but that doesn't prove a thing.