Patrick Daum
Blog Post #2
Current Analysis of Three Labor Statistics
When analyzing the labor market
there are many different sources of information and statistics that can cloud
the economic picture. Three major statistics that can be used to understand the
labor market are the unemployment rate, employment-population ratio and the
labor force participation rate. These statistics when applied using accurate
sources such as The Bureau of Labor Statistics can open up a plethora of
practical uses. Most simply though, past trends can be analyzed to make predictions
about what can be expected to happen in the future.
The first step to analyzing and
using information from the labor market statistics is to fully define the key
terms. Unemployment rate is one of the most commonly used statistics when
discussing the state of the labor market. It is simply measured as the percentage
of the labor force that is unemployed. Not included in the labor force are
workers who have discontinued the job search. (Mankiw, 2011). It is not a
flawless indicator by itself but it can be very helpful. The
employment-population ratio is in a way, the opposite of the unemployment rate.
The employment-population ratio shows what percentage of the population
employed persons make up. Its benefits as a statistic are that it is not
affected by slightly vague terms such as discouraged worker (“Employment-Population
Ratio”, 2014). The labor force participation rate is similar to the
employment-population ratio in that it shows what percentage of the population
is either working or unemployed (“Employment-Population Ratio”, 2014). The ‘unemployed’
part of the labor force participation rate is integrating the same components used
to qualify to be a part of the unemployment rate. These three statistics can
paint a clear picture for economists when trying to understand the labor market.
According to the Bureau of Labor
Statistics, unemployment has not fluctuated much, remaining at a respectable
6.7 percent. It has held steady at approximately 6.7 percent since the
beginning of 2014. This is encouraging because as recently as March of 2012 the
United States experienced unemployment rates reaching over 8 percent. Since
then the economy has put people back to work in some capacity and therefore
unemployment rate has been steadily decreasing. Not only is unemployment rate decreasing, but
the average hourly wage has risen by nearly half a dollar over the past calendar
year (The Employment Situation, 2014). There has been little change across
different demographics. One could reasonably project the unemployment ratio to
remain steady or even decline slightly in the future. The employment-population
ratio has also experienced little fluctuation over the past months (The
Employment Situation, 2014). This trend indicates that even though the
unemployment rate is slowly going down, as a whole our population isn’t experiencing
anything close to a boom in employment numbers. 58.8 percent of the population
is employed and this number has remained very stagnant, even across different
demographics. I would expect it to
remain that way unless some drastic policy change intervenes such as the raising
of minimum wage to $10.10. The labor force participation rate has increased in
March (The Employment Situation, 2014). It increased by .2 percent which
equates to nearly 503 person increase in the last month. Despite the increase,
this is troubling. The economic condition is giving little motivation for the
unemployed to seek employment in the work force. If there was, this number
would jump as job prospects increased. Much like the employment-population
ratio, if there is no government policy change, the labor force participation
rate will remain steady in the upcoming months.
Sources:
Mankiw, G. (2011). Principles
of Macroeconomics (6 ed.).
Andover : South-Western College Pub.
The Employment Situation – March
2014. Bureau of Labor Statistics. Retrieved from: http://www.bls.gov/news.release/pdf/empsit.pdf
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