Wednesday, July 10, 2013

The Astonishing Collapse of Work in America

Nicholas Eberstadt writes:

Some readers will surely doubt my assertion that U.S. labor markets are in such parlous straits. If things are so bad, they may reasonably ask, why isn't there greater public alarm? Part of the reason, I would submit, is that we as a country do a very bad job of measuring joblessness. Mis-measuring the scale of the problem has significantly contributed to our present unwarranted complacency.

The official yardstick almost always used in assessing joblessness in America is the civilian unemployment rate, which tracks the overall percentage of workers and job-seekers without work. This may sound like a reasonable way to gauge joblessness, and the official unemployment rate does indeed have its uses. But as a practical matter this statistical tool seriously disguises and understates the magnitude of the ongoing jobs crisis.

According to the conventional unemployment rate, 7.6 percent of the country's civilian labor force was out of work last month (June 2013). While this is hardly a ‘good' number, these official figures suggest the jobs market is on a slow but steady rebound, gradually improving since early 2010, when the national rate was nearly 10%. According to those same numbers, current levels of joblessness are bad but by no means unprecedented: the official unemployment rate, after all, was above 7.6 percent at times in the 1970s, the 1980s, and (briefly) even in the 1990s.

While the unemployment rate may be fine for some tasks (such as estimating how many people will be looking for unemployment benefits) it is utterly incapable of gauging how many should be, or could be, looking for work in the first place. A more basic and intuitively meaningful sense of how the jobs market is performing in this respect comes from the employment-to-population ratio (or simply the "employment ratio") for adult men and women.

When we look at these numbers, we get a very different picture of labor market conditions in America. By these numbers, there has been no "recovery" whatsoever in the jobs market since the Great Recession. Quite the contrary: the employment ratio today appears to be stuck at the same awful level recorded in early 2010-the worst level for more than a generation.

Today just under 12 million men and women are officially classified as unemployed, roughly twice as many as in early 2000. But if our national employment ratio today were as high as in early 2000, when this measure reached its zenith, about 15 million more Americans would be working today. And remember: over 10 million of today's men and women with jobs are working fewer hours than they want to-well over twice as many as in early 2000. When we look at the jobs problem this way, we see it is vastly bigger than the official unemployment rate implies.

And bad as all of this sounds, the true situation is if possible even worse-for the civilian employment ratio conflate trends for men and women. Broadly speaking, paid employment has been on the rise for women ever since Washington started keeping detailed numbers on the phenomenon back in the late 1940s-a reflection, and in turn a driver, of the big changes in the status of women underway in the postwar era. When we look at the employment ratio for men alone over the postwar era, we witness a radical, almost gut-wrenching drop.

Eberstadt's full article is here.


  1. There is always plenty of work to be done; human wants and needs never go away.

    To me a better title would have been, the astonishing collapse of men willing to work.

    At some price, men will work, and at some price they wont. At some price, someone will higher labor, and at another they wont.

    Now there may be other intervening forces that result in less men working such as transfer payments or regulatory barriers, but to say that "work" has collapsed is just not accurate.

  2. Mr. Eberstadt is a typical quant. Like the drunk looking for his lost keys under a street light rather than in the dark alley where he actually dropped them because..."the lights better here..." He sees a trend and tries to explain it with easily visible or impossible to verify variables like a "country's ability to create jobs" or behavioral changes due to acceptability and affordability of not participating in the workforce. Perhaps the trend is a result of measuring tax-role participation not workforce participation. A hard look in the dark alleys might reveal a growing black market serving the true needs of men looking for work. In that case only "government" analysts would see a problem. Everyone else would see the market solving a problem. But that's impossible to know. So Eberstadt's analysis is useless.