We have now returned to an economy where those who leave their jobs are more likely to have done by quitting voluntarily than by being laid off or discharged involuntarily
Read the whole thing. One interpretation of the data is that the labor market has now divided. There are active workers, who are exhibiting fairly typical patterns of working, quitting, and being laid off. And there are inactive workers, who have either officially or unofficially left the labor force. If this interpretation is correct (and I am not confident that it is), then we may be close to full employment.
Which raises the question: Did the ‘recovery efforts’ solidify unemployment in America, bringing the ‘base rate’ up a few percentage points?
I know the trend in labour participation was downwards even before the recession, but I don’t see any public policy initiatives since 2007 doing much to reverse it. I did see a lot that would worsen it.
I started a project to try to gather and study BLS data to investigate a related question (which might inform Arnold’s speculation) [I’ve not finished.]
We see that unemployment is much higher among those without a high school degree than those with a professional degree (order 6x difference.)
We also see that some people have been unemployed for a very long time.
The thing I wonder is – is there a correlation between level of education and being unemployed very long term, and/or level of education, age, and being unemployed very long term and/or seeking some kind of disability support.
One’s guess is that older, less educated, people are more likely to fail to find work and/or leave the labor force. But of course that guess could be very wrong.
IMPLICATION: We might be close to the “full” employment level if we consider low marginal output and zero marginal output employees as not actually being viable labor market participants. This would be economic full employment, but is clearly not political or social full employment.
IMPLICATION2: The population/employment and labor-force-participation rates will not get a whole lot better until some very long term improvement the fraction of people prepared to be successful workers takes hold.
Have a nice day….
There is definitely a correlation between age and unemployment duration (older is longer). I’d love to see data that differentiates unemployment duration within age groups, by education.
I have come to some conclusions:
1) Older workers have naturally longer unemployment durations, so the current demographic climate probably naturally dampens the rate of employment recovery.
2) The minimum wage and Extended Unemployment Insurance created strong, pro-cyclical employment behavior. I agree that we have been nearing full employment. However, with the end of EUI, full employment probably fell from around 6%, back to around 5%, and we will see a continued strong decline in unemployment over the next several months. These two policies probably accounted for about half of the excess unemployment at the height of the crisis.
I recently saw a paper from the Boston Fed that found that substantially all of the excess unemployment came from 2 groups:
1) job leavers and entrants under 35 years of age, but not job losers. This is the signal we would expect to see from a minimum wage induced shock in labor demand- less employment churn from workers, but lower hiring of new entrants.
2) job losers above 45 years of age, but not job leavers or entrants. This is the signal we would expect to see from a shock to labor supply from extended unemployment insurance. Most workers who can and do have long durations of unemployment are older.
Here’s the most recent post I did on the Boston Fed paper:
http://idiosyncraticwhisk.blogspot.com/2014/02/quick-follow-up-on-beveridge-curve.html
No. See, full employment is exactly what it was at the Tippett top peak PLUS the maxed out trend line!