Labor-Force-Rate.jpg

Four Years of Obama Undoes Eight Years of Reagan

Wow this graph really says it all.

The Labor Force Participation Rate shows what percentage of people are working, looking for a job and not looking for a job.  It is a better yardstick to measure the workforce in America than is the usually cited “unemployment rate” which doesn’t count people  who are so frustrated they stopped looking for a job.

The graph shows a huge upswing in labor participation through the Reagan years.  George H.W. Bush, Bill Clinton and George W. Bush kept the numbers up in Reagan territory.   Since Obama has taken over, he has wiped out the entirety of the Reagan gains.

Hat tip to www.ZeroHedge.com for the graph.

They also have an excellent piece on why the unemployment rate right now is really 11.6%, not the 8.1% the administration is claiming.  Read it here.

  1. Boymoose

    Great graphic.  Thanks  for pointing it out Mr. De Seno.

    Why don’t presidents use graphics like these in speeches?

    Mr. Robinson or Mr. Senik?

    Is it below the office of president?

  2. Nathaniel Wright

    I would love to see an “adjusted” unemployment rate which uses the reduction — or increase — in the Labor Force Participation Rate to create a more accurate unemployment rate depiction.  One could use December 2008 as “baseline” so that Bush’s unemployment rate at the end of his term becomes the baseline.

  3. Valiuth

    What happened before the 80′s? Was the labor participation rate in the 50′s and 60′s boom times also going up? I have some doubts as to how useful this graph is as a point against the O without knowing if the Reagan gains are unique or not. How do we know labor participation hasn’t dropped off significantly because of baby boomer retirements? 

  4. dittoheadadt

    “The Labor Force Participation Rate shows what percentage of people are working or looking for a job.  It is a better yardstick to measure the workforce in America than is the usually cited “unemployment rate” which doesn’t count people who are so frustrated they stopped looking for a job.”

    Not sure I understand the difference – sounds like they BOTH don’t count people who stopped looking for a job (e.g. the LFP rate apparently shows people working or looking for work, which by definition doesn’t include people “who are so frustrated they stopped looking for a job,” just as the “unemployment rate” doesn’t include those people, either).

  5. Tommy De Seno
    C
    dittoheadadt: Not sure I understand the difference – sounds like they BOTH don’t count people who stopped looking for a job (e.g. the LFP rate apparently shows people working or looking for work, which by definition doesn’t include people “who are so frustrated they stopped looking for a job,” just as the “unemployment rate” doesn’t include those people, either). · 4 minutes ago

    You are right I made a mistake in rushing to get it up.  LFPR includes folks who have given up looking in the unemployed numbers where the UR does not.

    I fixed it in the text.  Thanks for the edit!

  6. Fricosis Guy

    I love the “explanation” this AM by folks like Mark Zandi re: the discouraged workers rate’s continued rise:

    1. States are ending extended unemployment benefits.

    2. To keep extended benefits, the unemployed must keep “looking” for work.
    3. Therefore, when extended benefits end, the unemployed stop “looking” for work and drop out of the workforce.

    Losing an income source… boy, that would be my signal to dial back on the ol’ job search!

  7. Jager

    Here is a link that allows you to look at this data over a longer or shorter time frame.

    http://data.bls.gov/pdq/SurveyOutputServlet

    From the 60s to 1998 ish participation was going up. from 2004 to 2009 participation was flat. From 2009 to 2012 there is a step decline.

  8. Tommy De Seno
    C
    Valiuth: What happened before the 80′s? Was the labor participation rate in the 50′s and 60′s boom times also going up? I have some doubts as to how useful this graph is as a point against the O without knowing if the Reagan gains are unique or not. How do we know labor participation hasn’t dropped off significantly because of baby boomer retirements?  · 10 minutes ago

    The available data goes back to 1948.   No other President has had a significant and consistent  drop like Obama.  Kennedy had a drop.   Even Carter had a gain.

    The numbers are damning to Obama.  They are a mirror opposite of the Reagan gains, and every other Presdient’s gain, for that matter.

    Here’s a graph:

    Labor-Force-Since-1948.gif

  9. Jager

    http://data.bls.gov/timeseries/LNS11300000

    sorry prior link did not seem to work

  10. Leporello

    It would be interesting to see the graph after removing mothers who used to work but now, because of the economy, have decided to stay home with their children.  It shouldn’t disappoint us that these persons have stopped actively seeking a paycheck.

  11. Valiuth
    Tommy De Seno

    Valiuth: What happened before the 80′s? Was the labor participation rate in the 50′s and 60′s boom times also going up? I have some doubts as to how useful this graph is as a point against the O without knowing if the Reagan gains are unique or not. How do we know labor participation hasn’t dropped off significantly because of baby boomer retirements?  · 10 minutes ago

    The available data goes back to 1948.   No other President has had a significant and consistent  drop like Obama.  Kennedy had a drop.   Even Carter had a gain.

    The numbers are damning to Obama.  They are a mirror opposite of the Reagan gains, and every other Presdient’s gain, for that matter.

    Here’s a graph: · 2 minutes ago

    Ok, that’s convincing.

    Is there any reason though to think that the aging baby boomers dropping out of the job market might make the graph go down naturally though? 

  12. Tommy De Seno
    C
    Valiuth

    Tommy De Seno

    Valiuth: What happened before the 80′s? Was the labor participation rate in the 50′s and 60′s boom times also going up? I have some doubts as to how useful this graph is as a point against the O without knowing if the Reagan gains are unique or not. How do we know labor participation hasn’t dropped off significantly because of baby boomer retirements?  · 10 minutes ago

    The available data goes back to 1948.   No other President has had a significant and consistent  drop like Obama.  Kennedy had a drop.   Even Carter had a gain.

    The numbers are damning to Obama.  They are a mirror opposite of the Reagan gains, and every other Presdient’s gain, for that matter.

    Here’s a graph: · 2 minutes ago

    Ok, that’s convincing.

    Is there any reason though to think that the aging baby boomers dropping out of the job market might make the graph go down naturally though?  · 8 minutes ago

    The question is above my pay grade.

    I recall Ricochet has a resident economist.  King Banaian. 

    Maybe he can help.

  13. Jager

    The Chicago Fed issued a report stating that half the decline in LFPR is due to baby boomer retirement and half due to the economy. 

    http://chicagofed.org/digital_assets/publications/chicago_fed_letter/2012/cflmarch2012_296.pdf

  14. MBF

    Whether it is a result of baby boomers retiring, or just an increase in the number of shiftless layabouts in their prime years, the trend is bad news.

    This goes beyond just the cost of public welfare benefits. What are the implications for our economy with millions of workers retiring and beginning to draw down their accumulated savings?

  15. Tommy De Seno
    C
    Mark Belling Fan: Whether it is a result of baby boomers retiring, or just an increase in the number of shiftless layabouts in their prime years, the trend is bad news.

    This goes beyond just the cost of public welfare benefits. What are the implications for our economy with millions of workers retiring and beginning to draw down their accumulated savings? · 8 minutes ago

    Great question MBF.  Wouldn’t the draw down of savings generate spending and boost the economy?

  16. Give Me Liberty

    I believe Baby Boomer retirement rates are at a slower pace than expected.  One reason is the poor economy and another is that Boomers (as a group) did a poor job of saving for old age. Besides, wouldn’t retirements create job openings for those not working. 

  17. Tommy De Seno
    C
    Give Me Liberty: I believe Baby Boomer retirement rates are at a slower pace than expected.  One reason is the poor economy and another is that Boomers (as a group) did a poor job of saving for old age. Besides, wouldn’t retirements create job openings for those not working.  · 1 minute ago

    Another interesting question.

  18. Jager
    Tommy De Seno

    Mark Belling Fan: Whether it is a result of baby boomers retiring, or just an increase in the number of shiftless layabouts in their prime years, the trend is bad news.

    This goes beyond just the cost of public welfare benefits. What are the implications for our economy with millions of workers retiring and beginning to draw down their accumulated savings? · 8 minutes ago

    Great question MBF.  Wouldn’t the draw down of savings generate spending and boost the economy? · 3 minutes ago

    There really shouldn’t be a boost in spending or the economy from drawing down savings.  The savings are replacing the income/spending that used to come from wages.  Retired people with a fixed amount of savings may even spend less.

  19. MBF
    Tommy De Seno

    Mark Belling Fan: Whether it is a result of baby boomers retiring, or just an increase in the number of shiftless layabouts in their prime years, the trend is bad news.

    This goes beyond just the cost of public welfare benefits. What are the implications for our economy with millions of workers retiring and beginning to draw down their accumulated savings? · 8 minutes ago

    Great question MBF.  Wouldn’t the draw down of savings generate spending and boost the economy? · 12 minutes ago

    I only have two semesters of Econ under my belt, so I can’t answer that with certainty. My understanding is that production and savings are what grow an economy over long term periods. Spending down savings in order to consume is probably good for GDP numbers in the short term, until the stored wealth is spent.

  20. Roberto
    Jager  Retired people with a fixed amount of savings may even spend less. · 0 minutes ago

    I would call this a certainty. Retirees are on a fixed income and interest rates on money market accounts and yields on CDs are paltry. This is a class of saver that can’t afford to “bet everything on black” and all the standard investments that contain less risk are giving yields that barely keep up with inflation if they do at all.

    These folks can’t afford to be big spenders.