JOBS | "Nonemployment"

Data before the 1960s show the importance of women
 entering the workforce in far greater numbers. Fewer men
have worked since then. The departure from the workforce
 of many women since 2000 is a puzzle.

The New York Times series by its Upshot staff on "nonemployment" is another reminder of what a great newspaper can do to put in front of the public the data and research that a democratic society needs to make decisions about public policy.

I have posted at least four times on the subject in the last year and a half.

The term "nonemployed" appears to have been formally introduced in 1997 by two University of Chicago economists as a broader category of nonworking people than the unemployed. They aren't working but are self-described in surveys by the Census Bureau for the Bureau of Labor Statistics as currently available for work and actively looking within the four weeks prior to the survey.

Two articles in the Times series on nonemployment have appeared. The first, by David Leonhardt, introduces the topic and stresses "the Decline of Work" as the theme. The central number he puts in front of us is that back in the 1960s only 5 percent of men in their prime working years of 25 to 54 did not work. Today, the number has more than tripled, to 16 percent. Is this a terribly worrisome number?

• Up till 2000, the relaxed response might have been: "Sure, relatively fewer men are working, but a far higher percentage of women are working, so that's the reason." It is natural that some men of prime work age might stay home to look after their elderly parents or children.
• But, since 2000, the share of women who are working has also been declining. So it is fair to say that since 2000 "the Decline of Work" applies to the population as a whole. A team composed of the Times, the Kaiser Family Foundation and CBS has set about trying to find explanations of the decline through polling.

The second report in the series shows highlights from their findings, as reported by Gregor ("driven by data") Aisch and Josh Katz as well as David Leonhardt. For example:

• Of men aged 25-54, 64 percent would like to have a job. 
• But only 45 percent have been actively looking in the last year (a looser definition than that of the BLS, which wants to know if they have been looking in the prior four weeks).
• In other words, about 30 percent of those nonemployed who say they would like to have a job have not looked for work within the prior year.
• Why not? Well one reason is that one-third of the nonemployed have been convicted of a crime. Nearly half of the nonemployed say they suffer from a disability or from general health problems and 43 percent say that not being employed in itself is bad for their mental health.

An amazingly useful chart shows the nonemployed status in every county in the United States, shaded to show where the nonworking status is most prevalent. The numbers are more complete than the unemployment numbers of the BLS, which by definition covers only the "civilian noninstitutional" population. The BLS therefore excludes the military plus institutionalized populations such as those who are incarcerated, presumably because of the difficulties inherent in conducting random-sample surveys of such populations.

This chart should be pondered by every elected official in the United States.

The research brims with public-policy implications. It supports bipartisan efforts to reduce the sky-high U.S. incarceration rates and to lower the high barriers to re-entry in the job market resulting from licensing requirements that are not related to job performance. I believe it supports programs for more apprenticeships among younger workers and Kurzarbeit-type programs to keep older workers work-ready during a recession.

Surely not by coincidence, the Times editorializes in favor of Mayor de Blasio's plan to try to keep the mentally ill who do not pose a risk to others out of jail because 40 percent of the 11,000 people in jail in New York City are mentally ill - an increase from a few years ago when the figure was 25 percent. Many of the inmates were arrested and convicted of low-level crimes such as not paying a fare or trespassing. These mentally ill inmates are expensive to incarcerate because they stay twice as long as  other inmates since they find it harder to obtain bail.

The Times is making an important contribution to public policy formulation for our recovery from the Great Recession. As the economy picks up we will need workers and the sooner we identify the reasons why people are not working and address them, the better prepared we will be to put them to work.

However, I wish that the Times would help the public understand how the concept of nonemployment fits together with something that has been measured and reported regularly since the Full Employment Act was passed after World War II, namely the civilian employment-population ratio. This indicator, which is presented at the top of this post, pretty fairly presents the extent of the nonemployment problem over time, although it omits the institutional populations that bulk large in some parts of the country.

The Great Recession

In his NY Times column today, "Bad News, and More Bad News," Clark Hoyt responds to mail that complains of the NY Times writing too much about bad news. He says: "A newspaper's responsibility is not to be an economic cheerleader, but to maintain a level head and help put the world in perspective for readers.

The theme of Mr. Hoyt's column can't be repeated too often, but I have a problem with the sentence that the Public Editor attributes to Times business columnist David Leonhardt:

"[A]s bad as things are, they are still not as bad as the recession of 1982, let alone the Great Depression."

Does Mr. Leonhardt still say that? If so, I would respond that his comparison between today and 1982, which he based on job-market data, is a case of apples and oranges. The reason for the recession that produced high unemployment in 1982 was Fed Chairman Paul Volcker's brave determination to break the back of inflation. In the process he allowed interest rates to soar.

The 1980-82 recession was painful, but recovery was entirely within the control of the Fed, which simply had to ease credit.

Continuing credit problems today are not the deliberate creation of the Fed, which has--on the contrary--eased the target fed funds interest rate down to the "zero bound". To say that 1982 was worse is like someone suffering an angina attack saying that his heart was worse off right after his triple-bypass operation. Not so, because the surgeons then had the situation under control.

A consensus is growing that this recession is the worst downturn since the Great Depression. It's global. it looks only at U.S. data and misses the full extent of the devastation from the credit freeze. The IMF’s Dominique Strauss-Kahn, said on March 10: "I think that we can now say that we've entered a Great Recession."

Prior uses of the term "Great Recession" (which was applied to earlier recessions) have been collected by Catherine Rampell of the NY Times using Nexis and were quoted by World Wide Words. WWW does not mention the prominent March 1 NY Times Op-Ed by economic historian Niall Ferguson.

On December 5, 2008 the U.S. Federal News Service reported: "Some economists are already calling this 'the Great Recession' because they fear it may be longer and deeper than any recession in recent history." As early as April 2008, Former Wall Street Journal writer Jesse Eisinger predicted in Portfolio that: "The next president will take office during what may well come to be known as the Great Recession."

One year ago, in March 2008, I contributed three posts for HuffPost about the Bankers' Panic of 2008. I was focused on regulatory shortcomings and what could be done about them, rather than the likely economic consequences.

A March 10, 2009 poll reports that 53 percent of respondents say the United States is at least somewhat likely to enter a 1930’s-like Depression within the next few years. The Rasmussen Reports national telephone survey found that 39 percent think this outcome is unlikely. The latest results are more pessimistic than those found in early January, when 44 percent said a 1930’s-like Depression was likely. It will be a big challenge to restore positive “animal spirits”. But the poll may be a sign of “blood is in the streets” –- Main Street as well as Wall Street.