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This Stat Will Make Your EPOP

I don’t know why Kevin Drum went with a snarky header [1] (well, actually I do, but that’s not a reason I’ll endorse), because this seems like a really good measure of employment to be following (courtesy of Jordan Weissmann [2]):

The BLS even produces a data point that Trump himself might like: The employment-to-population ratio for adults between the ages of 25 and 54—or “prime-age EPOP.”…It gives us a raw look at the employment rate, without any fancy caveats about who is and isn’t part of the labor force. And because it only tracks workers 25 to 54, it isn’t really distorted by the wave of retiring boomers or growing college attendance. It’s a simple snapshot of the portion of the population we most need to worry about….Best of all, from Trump’s perspective at least, prime-age EPOP has plenty of room for improvement….If Trump wants to argue that Obama left him an economy that was still hurting, this is one stat that will easily help make the case.

And look: it does!

That’s actually the inverse of EPOP, a measure not of who’s employed but who isn’t, so it’s more directly comparable to the unemployment rate. In other words, this is everybody of prime age who is not working  — whether they are unemployed, discouraged, back in school, staying home as a full-time parent, whatever.

And, as the chart clearly shows, the Great Recession really did a number on workforce participation, with about 5% of this prime-age cohort dropping out. And the recovery has been weak. Even after the recession ended, participation didn’t start to improve for a couple of years. And now, with the recovery decidedly long in the tooth, we’re still only back to a level comparable to the peaks after the last two recessions.

Right now, the unemployment rate is 4.7%. But 21.8% of prime-age potential workforce is not gainfully employed. That’s about where this measure was in 1992, when the unemployment rate was 7.5% and Clinton rode to victory on the slogan, “It’s the Economy, Stupid.”

I highly doubt that this measure can be explained by more people staying at home to parent full-time, or engaged in full-time education or training that will provide them with skills and credentials to improve their income. It’s partly explained by the explosion in disability claims — but that should be no comfort at all. Ultimately it is what it looks like: evidence that the recovery, at least in terms of employment, isn’t nearly as good as it looks (and that the recession that preceded it was arguably worse than it looked at the time).

This isn’t an anecdote. It’s data, data that confirms what the last election told us: that while by some important measures the economy really has recovered, by other measures there is an awful lot of pain out there, pain from the persistent lack of remunerative employment. And I’d wager anything that if you sliced this measure geographically, you’d see much better numbers in both red and blue states where Trump underperformed than in the states that put him over the top.

We should be watching this measure — not only because it’s a good way to monitor the administration’s economic performance, but because alternative approaches the opposition may tout better speak to it if they want to get traction.

15 Comments (Open | Close)

15 Comments To "This Stat Will Make Your EPOP"

#1 Comment By M1798 On January 26, 2017 @ 2:23 pm

I think the prime age male labor participation rate make it look even worse:

[3]

Both cultural and economic forces are pushing women into the labor force, but men are still near the recession low.

#2 Comment By collin On January 26, 2017 @ 2:47 pm

I highly doubt that this measure can be explained by more people staying at home to parent full-time, or engaged in full-time education or training that will provide them with skills and credentials to improve their income. It’s partly explained by the explosion in disability claims — but that should be no comfort at all.

What if it is all three reasons and three is evidence for each one as part of the reason. So far we have seen
1) School is taking longer
2) The divorce rate is going down and home schooling is increasing. I bet this explains some of this.
3) And yes disability claims.

Anyway I wish the chart did show back to 1960 as I believe the average is higher and there was an enormous boom in the 1990s that we only see once every 70 years. I bet today is about the same as this figure was in 1984.

#3 Comment By Jones On January 26, 2017 @ 3:28 pm

It looks to me like it lingered because of craven Republican obstructionism which prevented us from implementing a bigger stimulus, and that it has been steadily decreasing since then regardless. Nothing to be thrilled about, but nothing to be outraged about either. This does not explain what is happening in the country.

#4 Comment By Rene On January 26, 2017 @ 3:31 pm

*on an absolute basis

Apologies, I reversed my meaning there. On a relative basis, the recovery might be worse given the apparently historically awful loss in employment in 2008.

#5 Comment By Rene On January 26, 2017 @ 5:46 pm

Looks like my original comment vanished.

Taking the chart as given, the post-2012 recovery seems to be steeper (hence stronger, in absolute terms) than the previous two. We’re still above the period average, but it doesn’t look at first blush like we’re far off the trend line.

This looks more like the effects of a population boom entering the workforce while competing for fewer jobs. I’d chart this up more to an illustration of the pernicious effects of automation on employment than an indictment of the recovery (which again, on an absolute basis, appears to have outperformed the recovery from the early 90s recession and dotcom with regard to EPOP).

#6 Comment By Craig On January 26, 2017 @ 8:19 pm

You say the recovery has been weak. But the slopes of the lines following each of the three recessions is about the same. In fact, it looks like the slope of the third recovery starts to increase midway through the Obama administration, suggesting a more rapid recovery rate than in the prior two recessions.

I’d say this shows that the rates of recovery are similar, what was different was the depth of the recession – the deeper the recession, the longer the time required to recover.

I also wish he had shown the data back to 1948. I think you would find that EPOP was probably higher in the 1950’s and 1960’s than it is today. What changed was the number of women in the work force. That was partially due to cultural change, and partially because of wage stagnation, which forced more moms into the work force to maintain family income.

#7 Comment By Bruce B On January 26, 2017 @ 8:43 pm

Twold be nice to define “EPOP.”

Ethernet point to point is a popular one, but does not seem to apply.

#8 Comment By philadelphialawyer On January 26, 2017 @ 9:51 pm

Not seeing it. Just as with the traditional unemployment rate, the numbers were horrible during the Bush Recession, and improved steadily under Obama. The upshot is that unemployment, no matter how crude or fancy, old or new, adjusted or raw, the metric you prefer, shot up under Bush and declined steadily under Obama. That is what this “data confirms.” And HRC was all about continuing Obama’s policies. Trump? Well, whatever his economic policies might turn out to be, his campaign claim was that Obama’s policies were disastrous.

So, this explains Trump’s win how, exactly?

#9 Comment By CascadeJoe On January 27, 2017 @ 7:50 am

Agree with all of the above, the data belies that this recovery was any weaker than the previous two, although there seems to be an upward trend in the data.

EPOP stands for Employment to POPulation ratio, maybe EPR was already taken (Early Risers Prosper??).

Checking out M1798’s link, I found the following.

1950-1986 EPOP < 60%
1986-2008 EPOP 60-65%
2008-2016 better than pre-1977.

This data used 16 and older, maybe there is more comparable data somewhere.

#10 Comment By EliteCommInc. On January 27, 2017 @ 9:27 am

Allow me to pipe in my rather boring dull, repititous whine.

We are not in a recovery and never have been.

Wall Street as a single measure is deceptive. Hard to count a recovery an industry that costs you 320 billion a year.

But more telling remains our import export deficit. Growth remains less than three percent. As a nation we continue to buy more than sell – period.

One should also examine how muw much of the economy is tax dollars a factor that increases a annully

#11 Comment By Rene On January 27, 2017 @ 1:25 pm

The trade deficit is a poor measure of recovery alone, as it doesn’t include services (where the US is a massive net exporter) or the influence of currency moves.

In simple terms, the dollar has strengthened massively over the past three years versus the currencies of our trade partners. This has caused the dollar value of the deficit to spike on paper. Even with no change in the flow of goods, the deficit would be expected to grow by the change in the exchange rates over that time. In addition, the strong dollar (along with the rising cost of diesel as energy recovers) causes US exports to be less competitive in the global market.

Net-net, we’ll see these high numbers (which are still far, far lower than the peak we reached under Bush) decline as the global economy recovers and our currency devalues. In the mean time, we’re really just looking at the effect of our *very strong* recovery relative to the rest of the world. If you think it’s been bad here you haven’t been anywhere else.

#12 Comment By Ben Stone On January 27, 2017 @ 1:29 pm

As others have pointed out, that graph shows that, AT WORST, the Obama years have been average for a recession recovery. Possibly even better than average.

I’m not sure how that translates into, “elect the dumpster apocalypse nationalist”. Maybe, just maybe, the crazy libs are right. White resentment lit a fire under the rural classes of America and they didn’t even realize it. (Or did)

#13 Comment By EliteCommInc. On January 28, 2017 @ 2:21 am

“The trade deficit is a poor measure of recovery alone, as it doesn’t include services (where the US is a massive net exporter) or the influence of currency moves.”

The growth rate includes services. The nation’s income, whatever that may be against verses what it spends.

Unless the overall economic growth rate exceeds 3% (this is the traditional number) the country is not in an economic recovery.

Again, WS is a very ineffective model by which to gauge economic growth. Concentrated wealth that also controls the media sources certainly want people to feel good so they will invest to boost the market. Like any feel good enterprise it’s the value of the product, it’s how one feels about it.

I am a fan of WS but they have left their foundations for riskier and creative means of adding value that bare little resemblance to how the price of goods and services work for everyday people.

It would be a mistake to note the recovery of the wealthiest in the US or the globe for that matter as a recovery for the whole.

#14 Comment By Rene On January 29, 2017 @ 3:04 pm

I’m honestly not sure what you’re trying to say here. “The” growth rate (I assume you mean GDP growth here) is essentially at it’s long term average.

The economy is in an economic recovery when between the time a recession ends and when we return to pre-recession levels, often measured by reduction of the output gap (or “slack” in the economy) between potential and actual GDP. As of year end, we are at the lowest gap since early 2008 ($156B). Our GDP has been above pre-recession levels since 3Q11.

[4]

If anything, by many metrics we’re beyond recovery… we’ve recovered.

Now, there is a massive issue with our economy: wages. Labor’s share of gross domestic income is still historically low (though it has recovered to about 2006’s level) and is probably one of the largest contributors to rising inequality. The market can extort these low wages out of labor because the labor pool is growing while the number of non-service sector jobs needed is shrinking. I don’t see a way out of that without some pretty severe legislative intervention or (but probably and) massive strikes and a resurgent labor movement.

In a previous job, I saw ships that 50 years ago took hundreds of union laborers days to load with tens of thousands of tons of grain filled in a few hours by machines overseen by two technicians. The ship that transported that grain across an ocean was staffed by a crew of less than a dozen. We’re hemorrhaging working and middle class jobs at the rate of technology and there’s really no profitable reason not to be. Until we disconnect the idea of work (or wages) from market forces, things are only going to get worse for those in non-service sector industries. There’s barely any room for them in our economy now… there will be no place for them within our lifetimes if we don’t change the system. But that is a much different argument than “our economy hasn’t recovered.”

In short: the economy is almost/has already recovered. The problem of fewer jobs at lower wages with more people competing for them is ultimately something the market can’t fix on its own, since the market created it through technological advances and efficiencies. Unfortunately, that is exactly what we built it to do.

#15 Comment By bill s On February 11, 2017 @ 12:55 am

if you get rid of the illegal workers then that would open up oppertunities to the black communities
to go back to work!!! thus reducing crime?