Apr

4

BLS data was used for the attached chart, which plots % of population employed 1948-present (Employment population ratio, %, age 16 or older).

From the late 1940's to the late 1970's, % of population employed varied in a tight range between 55% and 58%. Starting in the late 1970's, % employed moved to a higher regime, staying above 60% from 1987 until 2009. The recent decline which began in 2007 dropped % employed to about 58% - a level not seen since 1983.

Major declines corresponded with recessions, as marked: 1980-83, 1990-92, 2000-03, and 2007-present.

The regime change to higher % employment could have occurred for many reasons, including more women entering the workforce, deferred retirement, and less business cycle volatility. Is the recent drop a move back to the lower regime, or simply a temporary recession-decline in the higher regime?

Fred Crossman comments: 

You wrote:

From the late 1940s to the late 1970s, % of population employed varied in a tight range between 55% and 58%. Starting in the late 1970s, % employed moved to a higher regime, staying above 60% from 1987 until 2009. The recent decline which began in 2007 dropped % employed to about 58%– a level not seen since 1983. Major declines corresponded with recessions, as marked: 1980 83, 1990-92, 2000-03, and 2007-present. The regime change to higher % employment could have occurred for many reasons, including more women entering the workforce, deferred retirement, and less business cycle volatility. Is the recent drop a move back to the lower regime, or simply a temporary recession-decline in the higher regime?

Kim, my humble reason for higher employment trend is more consumption and more debt incurred by American since late 70s, early 80s. Americans needed the money for a larger home, second home, second car, etc, basically greater spending and consumption– to pay off more more debt. (top chart). top chart also parallels greater debt incurred by American.

Lower chart of declining GDP (parallels a declining savings rate and wages that have not kept up with inflation). Average American less wealthy (very top class now is wealthier with government help, however, that is another topic). Also, going off gold standard encouraged more central bank money printing to inflate away federal debt. Also now takes more debt for every dollar in GDP gain.


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