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Do you ever feel a bit of a disconnect between the continuous media reports that the economy is doing awesome (here, here, and here to name a few) and how much it feels like the economy, to use a technical term, sucks outside of the stock market? Well, you’re not alone, and a couple of basic charts will validate your feelings. This is not data produced in the depths of my basement while I replace the tinfoil around my head. These are government-reported numbers on the health of the labor market. I call your attention to the time period during which the media was harping on the theme of, “It’s the economy, stupid!” and our recent “awesome recovery.”
This first chart shows the labor force participation rate, measuring the percentage of adults who are working. I’m using this instead of the commonly reported – and improving – U3 unemployment rate, because U3 has about as much correlation with the health of the labor market as the ratio of pixies to hobgoblins in Neverland. The reason I’m so down on U3 is that it behaves as if the underemployed are fully employed. (Settle down, James Pethokoukis, I mean the objectively underemployed, as in, part-time workers who want or need to work full time.)
Moreover, it suggests the long-term unemployed no longer count. Can someone please point to the recovery? Focus on the trend line in this chart. Up is good and down is bad, for those of you who, like me, attended public school. When you look at it that way, it’s clear that our situation now is worse than it was during the horrible recession of the early nineties.
Now, you might think, “Okay, fewer people are working, but I bet those who do work have it pretty sweet in the recovery, because the Times told me they do.” Unfortunately, no.
The next chart shows real wages in 2013 dollars. Again, no fancy statistics, just a line going up and down. Can someone please show me where the wage recovery that’s going to drive this economy forward takes place?
I don’t point these things out to depress anyone or to make large newspaper publications look even sillier than usual. Those are bonuses. I point it out because I’m tired of the media telling me that down is up, and I don’t see how anything can get better until we recognize the problem.