It ’s the Demographics, Stupid: The Employment Rate Is Better Now Than Its Pre-Crisis Peak

Today ’s jobs numberssurprised on the upside. The unemployment rate fell to 3.6 percent and 263,000 jobs were created in April, exceeding analysts ’ expectations.Yet one indicator looks as if it still lags its pre-crisis peak: the employment-to-population ratio.The headline rate for all aged 16+ topped out at 63.4 percent in December 2006. Today, it stands at just 60.6 percent (a 2.8 percent point decline). To translate that difference to hard numbers: if the employment rate of 2006 was replicated today, 7.4 million more people would be in work.Should this be a matter of great concern? No. For there ’s a simple explanation: demographics.A structural decline in that ratio is what we would expect from an aging population. If one adjusts for the demographic change we have seen, the employment rate is already performing better today than at the height of the pre-crash boom.Consider Figure 1 below. The employment rate for prime age adults has near enough fully recovered. The rate for those over 55 actually peaked a couple of months ago but is still 3.8 percentage points higher than in December 2006. It ’s only the youth employment-to-population ratio (16-24 year olds) that falls significantly below its pre-crash summit.Employment to Population Ratio!function(e,t,s,i){var n= " InfogramEmbeds " ,o=e.getElementsByTagName( " script " )[0],d=/^http:/.test(e.location)? " http: " : " https: " ;if(/^\/{2}/.test(i)&&(i=d+i),window[n]&&window[n].initialized)window[n].process&&window...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs