How Many People Should Be Working?

A blog about business and economics.
Feb. 1 2012 12:07 PM

How Many People Should Be Working?

Now and again you hit upon arguments that hinge not on the unemployment rate (the share of job-seekers who can't find a job) but the employment/population ratio (the share of people who have jobs) which are very different things. This, for example, is an optimistic unemployment rate story about the past year of the American economy:

1328115997931

By contrast, the employment/population story looks quite a bit worse:

1328116023420
Advertisement

Obviously these are both true stories and both important. But I do think it makes sense to put more weight on the unemployment story than the emp/pop story. That's primarily because of this:

1328116050083

In this chart, the US employment/population ratio is in blue, the UK employment/population ratio is in yellow, and the German employment/population ratio is in red. You can see that the two English-speakign countries have basically always had higher ratios than Germany, even though the German labor market is currently booming and ours is slumping. We also see that in the seventies there was a structural US-UK gap in favor of the UK (sadly the data doesn't go back to before 1970) which reversed polarity for about 25 years, and now the US and UK have converged. These are all interesting and important fatcs. If you want to understand the GDP gap between the US and Germany, it basically all comes down to the fact that a larger quantity of Americans are engaged in market production. But while these gaps are important to understand, as both an economic and a sociological matter, it's really not clear that they're identical to cyclical labor market issues.

If the US had gone into the current recession with a low emp/pop ratio then I think a further fall would be a clear reason to run around in hair-on-fire mode but we actually entered it with an unusually low ratio. We should most certainly have our hair on fire about the millions of people who are looking for jobs and can't find them, but I don't think that a decline in the number of job-seekers per se is obviously cause for alarm.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Talking White

Black people’s disdain for “proper English” and academic achievement is a myth.

Hong Kong’s Protesters Are Ridiculously Polite. That’s What Scares Beijing So Much.

The One Fact About Ebola That Should Calm You: It Spreads Slowly

Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.

A Jaw-Dropping Political Ad Aimed at Young Women, Apparently

The XX Factor
Oct. 1 2014 4:05 PM Today in GOP Outreach to Women: You Broads Like Wedding Dresses, Right?
Music

How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

How Tattoo Parlors Became the Barber Shops of Hipster Neighborhoods

This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century

Moneybox
Oct. 1 2014 8:34 AM This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century To undertake a massively ambitious energy project, you don’t need the government anymore.
  News & Politics
Politics
Oct. 1 2014 7:26 PM Talking White Black people’s disdain for “proper English” and academic achievement is a myth.
  Business
Moneybox
Oct. 2 2014 8:07 AM The Dark Side of Techtopia
  Life
Quora
Oct. 2 2014 8:27 AM How Do Teachers Kill the Joy of Reading for Students?
  Double X
The XX Factor
Oct. 1 2014 5:11 PM Celebrity Feminist Identification Has Reached Peak Meaninglessness
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
  Arts
Brow Beat
Oct. 2 2014 8:47 AM Season 2 of The Bridge Was Confusing, Bizarre, and Uneven. I Loved It.
  Technology
Future Tense
Oct. 1 2014 6:59 PM EU’s Next Digital Commissioner Thinks Keeping Nude Celeb Photos in the Cloud Is “Stupid”
  Health & Science
Bad Astronomy
Oct. 2 2014 7:30 AM What Put the Man in the Moon in the Moon?
  Sports
Sports Nut
Oct. 1 2014 5:19 PM Bunt-a-Palooza! How bad was the Kansas City Royals’ bunt-all-the-time strategy in the American League wild-card game?