The Unemployment Rate went up in June

Discussion in 'Economy' started by longknife, Jul 7, 2019.

  1. pinqy
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    pinqy Gold Member

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    Nothing in there contradicts anything I said. None of your cites claimed a falling participation rate caused a drop in the UE rate.

    A dropping labor force will cause the participation rate to drop. IF the drop also includes a large number of UNemployed, then the UE rate will drop as well (if the unemployment level tdrops faster than overall labor force) But otherwise you can certainly have increasing participation rate and rising unemployment rate. Look at the early 1980’s: that’s exactly what happened.
     
  2. U2Edge
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    U2Edge Gold Member

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    I never said that with an increasing participation rate one would not see a rise in unemployment. That's in fact my point. Every month when these articles talk about the unemployment rate coming out, often if there is a drop in the unemployment rate, it is explained as more of the fact that labor force participation rate declined because people left the workforce for whatever the reason. Example , the unemployment rate dropped from 4.9% to 4.8%, but that was because labor force participation went down from 64.2% to 64% as people left the workforce for whatever reason. Along the same lines you will see that "this month unemployment rose from 4.2% to 4.3% as more workers entered the labor force pushing the labor force participation rate up to 63.2."

    I never said that you can't get a rise in unemployment when the labor force participation rate is falling. But the main feature of the last 10 years has been declining labor force participation rate because the retirement of the baby boom generation. This is listed by many as one of the main factors in the drop in the unemployment rate over the last 10 years. The prediction right now is that the labor force participation rate will fall to 59% in the next 8 years because of baby boom retirement. This will likely help keep the unemployment rate low.

    I don't know if this is simply a mix up of wording on my part or poor reading comprehension, but I've seen dozens of articles discuss the decline in labor force participation coinciding with a decline in the unemployment rate and the drop in unemployment being highlighted as not a true drop in unemployment because of the drop in the participation rate due to people leaving the workforce. But then good news comes when the unemployment rate goes up just as the participation rate goes up because more people entered the workforce.

    I've also seen it be said that were entering an employees market instead of an employers market due to the retirement of the baby boom generation. With massive numbers of people leaving the work force each year due to retirement, employers have a tougher time filling positions and are dipping into the pool of "unemployed people" reducing it. I think you suggested that this is not the case though.
     
  3. U2Edge
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    U2Edge Gold Member

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    I never suggested that the raw number of people employed has been dropping, in fact it increases every year or generally has increased every year in recent history. I believe the nominal figure has increased almost every year from 148 million in 2006 to 160 million in 2017 and is anticipated to rise to 167 million by 2026. But with the retirement of the baby boom generation, it forces employers to dip into the unemployed ranks to help fill the jobs that are out there which is steadily increasing. This situation makes it easier for the employee to find a job. It lowers the unemployment rate, makes it tough for the employer to fill jobs.
     
  4. gipper
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    gipper Libertarian/Anarchist

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    Agree on all points.

    What I find interesting is it seems many employers are forcing boomers into retirement by termination. This is purely anecdotal but I know of many people in their late fifties to early sixties, who have lost their jobs. I wonder what percentage of boomers are forced to retire rather than chose to.

    I can understand employers wanting younger workers but finding them in this environment, must be difficult.
     
  5. U2Edge
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    U2Edge Gold Member

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    Being forced to retire from a business or company does not necessarily mean the individual leaves the workforce. That forced out manager may now be a limo driver. I think this was more common back in 2009-2010 at the height of unemployment due to the recession. I think discrimination by employers for any reason is much less now and looks like it will be much less in the near future due to the labor shortages. If your struggling to find employees, age is less of a factor. I see a lot of fast food joints employing people under the age of 16 or over 65, especially on the weekends. I walked into a McDonalds a couple of weeks ago and did not see anyone that looked older than age 12 working there which was a shock.

    Another interesting thing is that the baby boom generation has I believed retired at a slower rate than other generations. So although the retirement of the baby boom generation has impacted the labor market, the impact would be larger if they were retiring at the rate previous generations did. The percentage of people still working over age 65 continues to increase.

    The United States is also likely to elect Joe Biden as the next President who will turn 78 just days after the November 3, 2020 election. If Joe Biden serves a full two terms, he won't leave the office of President until age 86.
     
  6. longknife
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    longknife Diamond Member

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    All of this negativity about people leaving the workforce omits the fact that 1 in 4 seniors have no desire to retire. (See my post on the subject)
     
  7. U2Edge
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    U2Edge Gold Member

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    Yes that is very true. Baby Boomers are leaving the work force at a much slower rate than past generations. But the Baby Boom generation is so large that the retirements that are happening are having a big impact on the labor force and employers. Great time to be an employee hunting for a new job.
     
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