Friday, June 04, 2021

The percentage of 25-54 year-olds employed rose in May

One weakness of the unemployment rate is that if people drop out of the labor force they cannot be counted as an unemployed person and the unemployment rate goes down. They are no longer actively seeking work and it might be because they are discouraged workers. The lower unemployment rate can be misleading in this case. People dropping out of the labor force might indicate a weak labor market.

We could look at the employment to population ratio instead, since that includes those not in the labor force. But that includes everyone over 16 and that means that senior citizens are in the group but many of them have retired. The more that retire, the lower this ratio would be and that might be misleading. It would not necessarily mean the labor market is weak.

But we have this ratio for people age 25-54 (which also eliminates many college age people who might not be looking for work)

The percentage of 25-54 year olds employed was 77.1% in May. It was 76.9% in April. It was 80.5% in Jan. 2020 and 69.6% in April 2020.  Click here to see the BLS data. The unemployment rate was 5.8% in May. Click here to go to that data. The % of those 16 and older employed went from 57.90% to 58.05%.

Here is a good graph from the St. Louis Fed. It shows that there are 126,077,000 people in the 25-54 year old group. So since we are 3.4 percentage points below the 80.5% of Jan. 2020 (the high point since the previous recession), that is still 4,286,618 fewer jobs (Hat tip: Vance Ginn of the Texas Public Policy Foundation). 

Also, we are up 7.5 percentage points since April 2020 (77.1 - 69.6). That is 68.8% of what we lost from Jan. 2020 to April 2020 (10.5 percentage points or 80.5 - 69.6). Then 7.5/10.9 = .688. So we have gotten about two-thirds of the jobs back. Good, but a significant amount of ground has still has to be made up.

Here is the timeline graph of the percentage of 25-54 year olds employed since 2011.


Here it is going all the way back to 1948. 


Anonymous said...

i wonder if the vast majority of this is service industry and hospitality. as the year goes on it would make sense for those jobs to return as more people start back going outside throughout the country(the south doesn't count as people never stopped going out). Just maybe we will be up to the 80% in no time so long as the virus is kept at bay which is seems like it will.

Cyril Morong said...

I hope you are right. Also, as more people get vaccinated more people will be willing to go out and go back to work. When the extra unemployment benefits run out it should also go up

Anonymous said...

on your last statement about extra unemployment benefits. I'm not sure i quite understand how that part is working. while on unemployment my understanding is you still need to look for work. can you just decline the work because unemployment pays more?

Cyril Morong said...

It looks like the search requirement was suspended because of Covid. Look at some recent headlines

Work search requirement for Pa.'s unemployed goes back into effect in July.

Virginia brings back job search requirement to receive unemployment

More Maryland unemployment changes: State will resume work search requirement in July

Anonymous said...

these articles shed some good light, thank you