US – Looking beyond the Unemployment rate

Looking for an alternative to the Unemployment rate ? Try the employment:population ratio. 

One alternative is to ignore the question of who is actively looking for work and focus, instead, on who is working. Specifically, check to see how many people there are in our state and then find out how many of them have jobs. If a large percentage of people have jobs, that suggests the job market is strong. When fewer people have jobs, it’s weak. This is called the employment:population ratio. And it suggests that Massachusetts has re-climbed just three of those 10 stairs we fell down during the recession.

Now there are problems with this approach, too. Back in the 1970s and 1980s, for instance, the employment:population ratio rose rapidly, but it wasn’t because of an explosion of new jobs. It was because women were entering the workforce. Sometimes the employment:population ratio is driven by long-term social and demographic changes, rather than the availability of work.

The big social change we need to account for today is the retirement of large numbers of baby boomers. Fortunately, we can avoid this if we focus on the working age population, which includes all residents between the ages of 25 and 54.

On this measure, the number of working-age people with jobs has recovered a bit from the depth of the recession, but it’s still well below where it was in 2007. Back then, 80.3 percent of people aged 25-54 had jobs. As of 2013, the number was 78.7 percent. That may seem like a small change, but when it comes to the employment:population ratio, movements of even one or two percentage points are quite substantial.

Alternative #2, the underemployment rate

Another way to get around the limitations of the unemployment rate is to count those people who aren’t actively looking for work but who would like to work. The underemployment rate does that, and it also counts part-time workers who would prefer to work full-time.

In the years since the recesison, the underemployment has barely recovered at all, climbing up less than 2 of the 10 stairs. It was 7.3 percent in 2007 and 13.2 percent in 2013.

What do these measures tell us?

Looking across these various measures, it seems that six years after the recession began the labor market in Massachusetts still has a good deal more recovering to do. It’s possible that the employment:population ratio and the underemployment rate have improved in recent months (we only have data through 2013). However, the numbers we have suggest we are far removed from a market where people who want good jobs can readily find them.

via Want to understand the jobs situation? Look beyond unemployment. – Politics – The Boston Globe.