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Posts tagged with: "CIVPART"

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A closer look at labor in the U.S.

BLS state-level labor force participation rates

The U.S. Bureau of Labor Statistics collects all kinds of data on the labor force, employed persons, unemployed persons, and unemployment rates. FRED now offers the BLS’s labor force participation rates for the individual 50 states and the District of Columbia. With this new addition to FRED, we can easily track a state’s labor force participation rate over time and compare performance across states.

By the way, the labor force participation rate is the number of all employed and unemployed workers as a percentage of the total population. By “unemployed,” we mean those actively seeking employment; and by “total population,” we mean the civilian noninstitutional population 16 years and older.

The first graph shows labor force participation rates for each state of the Eighth District (the region served by the St. Louis Fed) plus the rate for the U.S. overall since January 1976. In February, the national rate was 63.2%, its highest level since September 2013. Three states in the District had higher participation rates in February than the national average: Indiana (65.2%), Illinois (64.6%), and Missouri (63.6%). Mississippi (55.4%), Arkansas (57.9%), Kentucky (59.0%), and Tennessee (61.0%) had rates below the national average. While peer comparisons are important, it’s also valuable to consider performance over time.

The second graph shows District state performance for the past year—that is, the year-over-year change in the labor force participation rate for each month. The year-over-year participation rate for the nation has improved for the past six consecutive months. Indiana shows the strongest and most consistent improvement in labor force participation, with a year-over-year increase in each month. In contrast, Missouri and Mississippi have declining participation rates, with negative changes each month. Arkansas also has had mostly negative changes each month, but in March had its first year-over-year increase since January 2018.

How these graphs were created: For the first graph, search for “Civilian Labor Force Participation Rate” and click “Add to Graph.” From the “Edit Graph” menu, use the “Add Line” tab to find seasonally adjusted state-level labor force participation rates (aka “LBSSA” in FRED). Add the corresponding series for each state: Arkansas (LBSSA05), Illinois (LBSSA17), Indiana (LBSSA18), Kentucky (LBSSA21), Mississippi (LBSSA28), Missouri (LBSSA29), and Tennessee (LBSSA47). For the second graph, take the first and use the “Format” tab to select “Bar” as the “Graph Type.” From the “Edit Line” tab, select “Change from Year Ago, Percent” for “Units.” Select “Copy to All.” Finally, select “1Y” in the options listed just above the graph to adjust the x-axis. The 102 state-level labor force participation rates (seasonally adjusted and non-adjusted series for the 50 states plus D.C.) can all be found in the corresponding release table.

Suggested by Kathryn Bokun and Kevin Kliesen.

View on FRED, series used in this post: CIVPART, LBSSA05, LBSSA17, LBSSA18, LBSSA21, LBSSA28, LBSSA29, LBSSA47

The recent evolution of labor force participation

Small movements from a lot of labor market churn

Since the early 2000s, labor force participation has been declining in the U.S. After peaking at 67.3 percent in March of 2000, the labor force participation rate declined consistently to 62.4 percent in September 2015 and has since flattened out. The first graph shows the period of decline in the labor force participation rate, which started in early 2000, flattened out in mid-2005, and then declined again from the onset of the Great Recession to 2015.

Several variables in FRED can illustrate the labor force dynamics at play behind the declining labor force participation rate. The next graph shows the annual change in the labor force (employment plus unemployment). While the labor force has mostly been increasing since 2000, it has not been increasing fast enough to keep up with population growth. Starting in 2014, however, the pace of growth in the labor force picked up, which led to the flattening out of the participation rate.

The last graph shows monthly flows into (red line) and out of (blue line) the labor force. These gross flows are very close to each other, with the net changes (green line) always close to zero. It is the net changes that explain the evolution of aggregate labor force participation. From 2009 to 2016, the positive values are not enough to offset the more negative values and more people flowed out of the labor force. More recently, however, the positive contributions more than offset the negative values, leading to an increase in participation. Despite this recent evolution, the graph does not seem to point to any particular new trend that’s different from the past. This suggests that more research is needed to understand the observed decline in the participation rate.

How these graphs were created:
Graph 1: Search for “Labor Force Participation.” Graph the first result and limit the date range from 2000 to current.
Graph 2: Search for “Unemployment.” Graph the series titled “Unemployment Level.” From the Edit Graph tab, type “Employment Level” in the customize data section search box. Click the series titled “Civilian Employment Level” and then click Add. Finally, type a+b in the formula box and change the units to “Change, Thousands of Persons.”
Graph 3: Search for “Labor Force Flows.” Graph the series titled “Labor Force Flows Employed to Not in Labor Force.” Repeat the process outlined in Graph 2 to modify the line by adding “Labor Force Flows Unemployed to Not in Labor Force” to the graphed series. Now, select the middle menu and search for “Labor Force Flows Not in Labor Force to Unemployed” and add this series as a new line. Repeat the process to modify the line by adding “Labor Force Flows Not in Labor Force to Employed.” Once again, use the middle menu to add “Labor Force Flows Not in Labor Force to Employed” as a new line and then modify the line by adding the remaining three flows as additional series on the new line. Use the letters assigned to each series to calculate the difference of the sum of those flowing into the labor force less those flowing out of the labor force (e.g., consider (a+b)-(c+d)).

Suggested by Maximiliano Dvorkin and Hannah Shell.

View on FRED, series used in this post: CE16OV, CIVPART, LNS17200000, LNS17600000, LNS17800000, LNS17900000, UNEMPLOY

What is unemployment?

There is more to it than not working

What is unemployment? To answer this question first requires a few definitions. A person is considered unemployed if he or she is actively seeking work and willing to take work here and now. It is therefore not sufficient to simply not be working. But this definition of unemployment does necessarily define (1) whether someone who is underemployed should be counted as well or (2) how intensely someone must search for a job to qualify as unemployed. For this reason, the Bureau of Labor Statistics provides different unemployment rates, graphed above. These are commonly called U-1 through U-6:

  • U-1 counts only those who have been unemployed for at least 15 weeks, which was traditionally a little longer than the average duration of an unemployment spell. This is considered to exclude short-term unemployment.
  • U-2 counts those who are unemployed because they have lost a job or completed a temporary job—in other words, workers in a precarious situation in the labor market, as they are more likely to find an unstable or unsatisfying job.
  • U-3 is the headline unemployment rate generally reported in the media: People who are able to work, ready to work, and have looked for work in the past four weeks. This corresponds the most closely to the definition of unemployment we started with.
  • U-4 is U-3 plus those who would like to work but have stopped looking—the so-called discouraged workers—because they believe there are no jobs for them.
  • U-5 is U-4 plus those who are marginally attached to the labor market who, for any reason, are no longer searching for work but may still work.
  • U-6 is U-5 plus those who are working part-time but would prefer to work full-time.

These various interpretations of the definition of unemployment allow us to have a better understanding of the status on the labor market. But one may still have some misgivings about them. For example, the higher-numbered definitions give equal weight to different classes of unemployed workers. For example, should a person qualifying for U-1 count as much as a person qualifying only for U-5 and U-6 when evaluating the health of the labor market? To address this question, there is the Hornstein-Kudlyak-Lange index that creates a weighted sum of the different categories. The goal is to evaluate the underutilization of labor in the economy. This index (it is available with and without the part-time workers from U-6) is plotted below along with the popular U-3.

The graph below shows the non-employment rate, which is quite different from the unemployment rate. Indeed, it counts all those who are not part of the labor force, which comprises those who are either working or unemployed. The non-employment rate, which is thus the complement to the labor force participation rate, measures those who do not want to work. Principally, these are retirees, students, people with various handicaps, people who dropped out of the labor force, and people who do not want to work. Note that military personnel are not part of any of these (civilian) calculations.

How these graphs were created: For the first graph, go to the Alternative Measures of Labor Underutilization release table from the Bureau of Labor Statistics’ Employment Situation release. Select all (seasonally adjusted) series and click “Add to Graph.” For the second graph, search for and select the monthly, seasonally adjusted unemployment rate. Then click on “Edit Graph” to add the two other lines: Search first for “non employment index” and select the base index (not the index that includes people working part-time for economic reasons). Then search for “non employment index” again and select the index that includes people working part-time for economic reasons. For the last graph, search for “labor force participation rate”, click on “Edit Graph” and apply formula 100-a.

Suggested by Christian Zimmermann.


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