Workforce participation is up for those over the age of 55. Cue Sammy Hagar's "I can't quit - 55." There has been discussion in the media that we are in a unique situation where we have more unemployed workers than jobs openings. Two surveys measuring two different things. Other than that... Do you want a Bloody Mary or a Screwdriver? The workforce participation rate was ballyhooed as the evidence of weakness under former President George W. Bush while it was less than that seen by former President Clinton. There was some discussion of concern during the final leg of the 2008 election that was buried under who could "out clean coal" the other. There was s minor discussion revived during 2012, except the drop in participation was being silenced because the weekly claims level was dropping below 400,000 seasonally adjusted claims, gasoline was dropping below $3 a gallon, and the official unemployment rate was dropping under 8%. So what if the participation rate was masking effective unemployment increases.
There are fewer teen workers now than July 2005 through July 2008. There was a Twitter Conversation in which I was involved saying that the workforce participation rate does not matter, and that if it does matter we need to exclude the "teen cohort." There are more teens right now that during July 2005 and July 2006, and there are more workers than July 2015 and July 2016. There are fewer teen workers than July 2005-2008. The good news is that the July teen worker level has been improving since July 2013. The quirkiness of the decline in employed workers between the ages of 45 and 55 years of age. We continue to see monthly record Employment levels for those over 55 years of age.
Experience versus Youth
The July Jobs Report was released this past Friday. Some people were confused by the jump in the Seasonally Adjusted Private Sector Worker number, and some were confused by the weaker Non-Farm Payroll Number. Some tried to soft-pedal the number saying it was disappointing, on one hand, and good because the May and June data were revised higher. So far this column has written the following articles:
The thing is that we are seeing increases across the board in the private sector workforce. We are seeing strengthening in Manufacturing, Mining/Logging, and Construction, historically male dominated industries. We are seeing those same jobs paying more this year than last July. These sectors have three of the five highest average weekly wages, with Information Technology and Professional Business Services round out the top five. The problem is that there has been a persistent bifurcation of the workforce. Younger workers are under-participating while older workers are not retiring.
Older People STILL want to work - Unemployment for those over 65 years of age up since last July. The unemployment levels for those over the age of 55 years old were below the July 2009 level for an extended period of time. Conversely, The unemployment levels for those over the age of 55 are now higher than they were during July 2005. There has been a huge drop in teens who answer to being unemployed. The same is true for 20-24 years of age.
The U-7 effective unemployment Rate is negative for those over 60 years of age. If you compare the unemployment rate this month with that from 2007 without comparing the participation rate you are being disingenuous. Unemployed workers are a fraction of the participants. The drop in the participation rate and drop in the unemployment rate under former President Obama was due to participants dropping out of the workforce, neither employed or unemployed. If they aren't employed they are effectively unemployed. People over 55 are participating more now than during July 2007. People under the age of 55 are participating less than they were during July 2007. The effective unemployment rate for those under the age of 55 is higher than the official U-3 unemployment rate. A negative unemployment rate is a "impossibility." All the negative U-7 means is that the older workforce is possibly boosting the overall participation rate.
There are pockets of the workforce that are doing better than other and there are pockets that are doing worse than other. Participation matters. Employment matters. Missing participants matter.
It's the economy.
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