Unemployment and an Aging Population

If you look at the unemployment by age graph I posted yesterday you'll see a trend. The younger you are the higher your unemployment rate. But, I wondered, was this what was really happening? Was it possible people were dropping out of the workforce? I looked at two age groups in particular: 45-54 and 55 and older and their respective populations and employment to population ratio.

The 45-54 graph paints a pretty obvious picture of what we might expect to see. After the recession the employment ratio drops significantly. Fewer people in this prime working group have jobs. The 55 and older is a little more tricky. They naturally have a much lower employment ratio since many are post retirement.

Still, it's interesting to see the aging demographics as the 45-54 population growth peaks in about late 2009 and that starts dropping a little. The 55 and older demographic is steadily growing. But looking at these two graphs doesn't tell you whether the unemployment rate is only dropping because people are dropping out of the workforce. To see that you'd want to compare the employment to population ratio with the unemployment rate.

Again it's expected that the employment to population ratio would take a dip in 2009 and the unemployment rate climb significantly. But we can see in late 2011 as the unemployment rate is dropping that the employment to population ratio is staying pretty steady. Let's zoom in...

Unemployment going gradually down and the employment to population rising a bit in December 2011 and January 2012. That would seem to dispel the idea of people dropping out of the labor force. In fact given the climb in the ratio it would seem to imply the opposite, that more people are getting back into the workforce.

Why don't the two follow each other in an obvious way? In October 2010 there's a significant drop in the employment to population ratio but the unemployment rate stays mostly flat. I'm guessing that's because a lot of people dropped out of the workforce here, gave up, stopped looking for jobs, etc. So the unemployment rate did not go up significantly (though did bump up a little).

None of these graphs will really be encouraging though until we can see an obvious month over month trend. Overall unemployment peaked for most age groups around late 2010. But it didn't start immediately getting better after that. Those 55 and older have fared significantly better than their younger colleagues but that doesn't mean age discrimination isn't still out there. Older works might be having a problem that they are part of a very large and growing population demographic so while they are more employable than younger people with better experience they also have to compete with many other folks their age who also have great experience. What do you think, do these graphs capture a slightly improving job market or is there more at play here?

Unemployment: Young & Old

Just a sneak peek on some data I am working on this week. Looking at unemployment across various age groups.

This is from the Bureau of Labor Statistics (seasonally adjusted) unemployment rate for each month for some select age groups since 2007. Why 2007? Well I wanted to have a good idea of where we were before the recession and where we are now. I don't think it's a secret younger people have a higher rate of unemployment. But it's interesting how it takes until age 35 for the ages to start nearing each other in unemployment rates. Could that have something to do with the way the government counts the unemployment rate or is it because younger, less experienced workers genuinely have a harder time finding employment? I plan to see if I can illuminate that a bit this week.

Wrapping up the latest economic data

There's a lot of jobs, unemployment and economic data that gets released daily and weekly. Here's a quick look at some bits that interested me.

Mass layoffs included 145,648 Americans laid off in December 2011. An average of about 100 people laid off in each case. The vast majority of layoffs in 2011 affected temporary workers but food service workers and school transportation were also heavily hit.

Wages and salaries increased by 1.6% in the private sector in the year 2011. This compares to a 1.8% increase in 2010. In the public sector the wage increase was also 1.8% in 2010 but only 1.3% in 2011.

Number of employed persons is predicted to increase by 14.3% between 2010 and 2020. Industries with the fastest predicted increase are healthcare and construction. This indicates an average yearly employment increase of 0.7% compared to 1.3% in the previous decade. And another interesting fact, the baby boom generation will all be 55 and older by 2020. Manufacturing and federal government employment are predicted to take the biggest hits in employment.

Initial unemployment claims for the week ending in January 28th were 367,000. That's down 12,000 from the week before.

Productivity was up 0.7% in the fourth quarter of 2011. That's a combination of an increase in hours worked as well as output per individual.

Unemployment rate drops to 8.3% at the end of January 2012 with (nonfarm) payroll employment increasing by 243,000 persons in January. Long term unemployed stayed mostly flat. People working part time who want full time employment but are unable to find it also remained mostly the same. Professional services, accounting, engineering, food services, retail and health care all had strong gains in employment.

Average hourly wage at the end of January 2012 was about $19.62, approximately a 1.5% increase from the year before. Average weekly earnings were $663.


(1) Mass Layoffs Summary
(2) Employment Cost Index
(3) Employment Predictions 2010-2020 Summary
(4) Initial unemployment claims
(5) Productivity
(6) Employment Situation
(7) Average hourly and weekly earnings