ZPOP is Popping

John Robertson, a senior policy adviser in the Atlanta Fed's research department, and Ellyn Terry, an economic policy analysis specialist in the Atlanta Fed's research department, report:

We have received several requests for an update of our ZPOP ratio statistic to incorporate September's data. We have also been asked whether the ZPOP ratio can be constructed from labor force data from the U.S. Bureau of Labor Statistics (BLS).

The ZPOP ratio is an estimate of the share of the civilian population aged 16 years and over whose labor market status is what they say they currently want (assuming that people who work full-time want to do so). A rising ZPOP ratio is consistent with a strengthening labor market. We constructed the ZPOP ratio from the microdata in the BLS's Current Population Survey, but we can also construct a very close approximation from the BLS's Labor Force Statistics data. Here's how (using data that are not seasonally adjusted):

Take total employment, and add those not in the labor force who do not currently want a job. Then subtract those who were at work from one to 34 hours for economic reasons. The ZPOP ratio is this figure as a percentage ofthe civilian population 16 years and over.

The following chart shows the history of the resulting ZPOP ratio over 20 years, seasonally adjusted.
Unlike the headline U-3 unemployment rate, which remained unchanged from August to September, the seasonally adjusted ZPOP ratio improved slightly (from 92.0 to 92.1 percent). Relative to an estimated 230,000 increase in the population over the month, the improvement in the ZPOP ratio was the result of an increase in the number of people who said they do not currently want a job and a decline in involuntary part-time employment in excess of the decline in total employment.

As would be expected based on Austrian business cycle theory in the current boom phase of the cycle, the employment picture continues to improve.

-RW