Assessing the Collapse of the American Labor Market: What Should Our Yardstick Be?

While the headline unemployment number is still only 8.1%, the Bureau of Labor Statistics reports inTable A-12: Alternative measures of labor underutilization that “total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers”–the underemployment rate–is 14.8%.In the Great Depression the nationwide unemployment rate according to David Weir reached an annual peak of 22.9% in 1932. Unlike the headline unemployment rate today, Weir’s unemployment rate concept makes no allowance for “marginally attached workers” who we today count as out of the labor force when we do our calculations: the Weir labor force grows at a steady 700,000 per annum between 1929 and 1932, while our labor force concept has fallen by 700,000 since last October. “Part time for economic reasons” is simply not a category in Lebergott’s or Weir’s unemployment series: they are imputing numbers between census benchmarks based on estimates of production and their hunches about cyclical labor productivity measures.Clearly the Weir 22.9% should be compared to some weighted average of today’s 8.1% headline number and today’s 14.8% underemployment number. But what are the appropriate weights? if the proper weights are 50-50, underemployment today is fully half the peak value it reached during the Great Depression. If the proper weights are 100-0, unemployment today is only 7/20 of its peak Depression value. If the proper weights are 0-100, unemployment today is fully 13/20 of its peak Depression value.What are the proper weights? Ah, that is what we call an “open research question.” I would **loooovvvveee** to get an Econ 210a paper this semester taking a shot at it…

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s