Paul Krugman has a really interesting article this morning where he presents a new formulation for reporting unemployment. As everyone should know, the unemployment rate is deceptive because it only counts people who are actively looking for work. As a result, a lot of people prefer the employment to population ratio. This number has gotten a lot of attention by Republicans ever since a Democrat has been in the White House.
Krugman points out that this is a useful statistic but it skews the numbers toward the older population because our country is getting older. His idea is to divide the population into three parts: 16-24, 25-54, and 55 and older. Then he weights these groups and comes up with the the graph below. In effect, he’s removed the bias of an aging population that should be working less.
I added the red dots. These are the values taken from the standard employment-to-population ratio graph. You’ve probably seen this graph before, and if you click over to Krugman’s article, you can see the graph itself. The thing that is disturbing about it is that there seems to be no (or very little) change after the 2008 recession.
But by weighting these three age groups, it is clear that over the last year and a half, we’ve seen steady, if frustratingly slow, job grown. This is what my intuition tells me. It is also what this month’s BLS data tell me. And what it should tell all of us. Jack Welch included.