Submitted by CARPE DIEM

According to Paul Krugman in today’s (Apr. 14) NY Times: The official unemployment rate may be relatively low — but the percentage of prime-working-age Americans without jobs, which isn’t the same thing, is historically high.
According to a comment on this earlier CD post about Krugman and Don Boudreaux’s response, Krugman was referring to the top chart above in the April 12 NY Times article by Floyd Norris “Many More Are Jobless Than Are Unemployed,” which claims that “Men in the prime of their working lives are now less likely to have jobs than they were during all but one recession of the last 60 years. Most of them do not qualify as unemployed, but they are nonetheless without jobs.”

Norris uses a new “NY Times jobless rate,” or “proportion of people without jobs,” calculated as: 1 - Male Employment Ages 25-54/TOTAL Population ALL AGES. Using employment/population data for men, women and all workers aged 25-54 from the BLS (via Economagic), the “NY Times jobless rates” are calculated and displayed in the bottom chart above.

If Krugman did refer to that article as his source, there are a few problems with both NY Times articles:

1. Krugman says “the percentage of prime-working-age Americans without jobs is historically high,” which is clearly not accurate. It would be more accurate to say that it is close to being historically low (see middle brown line above for “All Workers”). Krugman may have used Norris’ data, but then mistakenly discussed the jobless rate for all workers aged 25-54 being high, when he should have been discussing men only aged 25-54.

2. When the data are displayed over a range from 0% to 70% (bottom graph) instead of a more narrow range from 2-16%, it’s much clearer that the jobless rate for men aged 25-54 has been relatively stable at about 12% for the last 25 years. Further, the jobless rate for all workers aged 25-54 has been relatively stable at about 20% for the last 25 years, and jobless rate for women has been stable at about 28% for the last 20 years, and is close to an historical low.

3. Biggest Problem: Norris is calculating his “NY Times jobless rate” as: 1 - Male Employment (ages 25-54)/TOTAL POPULATION ALL AGES MEN AND WOMEN, and NOT MALE POPULATION AGES 25-54, which can obviously be decreasing (and the jobless rate increasing) for demographic reasons like rising life expectancy that are completely unrelated to labor market conditions, or the state of the economy. For example, the Male Employment (ages 25-54)/Total population peaked at 96.4% in 1953 (jobless rate of 3.6%) and is now 86.2% (jobless rate of 13.8%), mainly because life expectancy has increased by almost ten years since 1953 (68.8 years to about 78.2 years). The increase in life expectancy means that there are now millions more Americans in retirement than ever before, which decreases the employment/population ratios and increases the jobless rates for demographic reasons, NOT job market weakness.

In other words, the “jobless rate” used by Norris in the NY Times includes retired Americans, who are NOT looking for employment. Likewise, Krugman’s “percentage of prime-working-age Americans without jobs” includes millions and millions of retired Americans who do NOT want a job! The top NY Times chart above could be more accurately labeled ” Fewer Men Are Working Because More Men Are Retired and People Are Living Longer.”
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