Unemployment

Blog #1

Rui Yamamoto

Unemployment rate is one of the important indicators to discuss the employment situation. This is because we can see the ratio of people who are seeking a job, but cannot find it from the rate. When we consider all of working-age population, we can use two other indicators, which are labor force participation rate and employment-population ratio. From labor force participation rate, we can see the ratio of labor force in the whole working-age population. From employment population ratio, we can see the ratio of people employed in whole working-age population. By combining those indicators, we can see the real situation of the employment. I will discuss the employment statistic from BLS by using them.

According to the data from BLS, unemployment rate is 5.0% and those who are unemployed is 7.9 million, which are basically same number as statistic in October, in November (The employment situation – November 2015, 2015). Also, the change in unemployment rate and those who are unemployed within past 12 months is 0.8% and 1.1million down (The employment situation – November 2015, 2015). We can see a good trend from this information because both unemployment rate and number of those who are unemployed are decreasing. In 2016, both numbers will continue to decrease if nothing happens. However, the chart of unemployment rate from November, 2013 through November, 2015 indicates that although unemployment rate is decreasing, declination of the graph is getting small (The employment situation – November 2015, 2015), which means marginal change is getting small. Therefore, I estimate that the declination will get smaller and smaller, so the decrease of unemployment rate will be small in 2016 compared to past 10 years.

How about labor force participation rate? BLS’s data indicates that labor force participation rate is 62.5% in November and the change of it is very small (The employment situation – November 2015, 2015). By just looking at this information, there is no problem. However, labor force participation rate in November, 2005 is 66% (Labor force statistics from the current population survey, 2015). Therefore, the change of the rate over past 10 years is 3.5% decrease. This is not good trend because the number shows that that number of labor force in whole working-age population is decreasing. By observing the trend, it is estimated that labor force participation rate will be stay at the same level or decrease in 2016.

Employment-population ratio shows almost same trend as the labor force participation rate. According to the BLS’s statistic, employment-population ratio is 59.3 in November and this number is exactly same as the number in October (The employment situation – November 2015, 2015). By looking at older information, the rate in November, 2005 is 62.7% (Labor force statistics from the current population survey, 2015). Therefore, employment-population rate decreased 2.4% over past ten years. Compared to the change in labor force participation rate, the range of decrease is a little bit small, but the trend of employment-population rate is not good. As well as labor force participation rate, it is estimated that employment-population rate will decrease in 2016.

By looking at each indicator, all of it decreases or stays at the same level in November, 2015 and this is not good trend. Also, by combining labor force participation rate and employment population rate, it is possible to say that the entire employment trend is people are losing job, but they are not looking for the job. The possible reason for this is because elder people are started to quit job before retiring age. However, it is unrealistic to conclude the trend with this reason. It seems that we need other indicators to measure what is happening in employment situation.

References

Labor force statistics from the current population survey. (December 6, 2015). Bureau of Labor Statistics. Retrieved from http://data.bls.gov/timeseries/LNS11300000

Labor force statistics from the current population survey. (December 6, 2015). Bureau of Labor Statistics. Retrieved from http://data.bls.gov/timeseries/LNS12300000

The employment situation – November 2015. (December 4, 2015). Bureau of Labor Statistics. Retrieved from http://www.bls.gov/news.release/pdf/empsit.pdf