“This Chart Is A True Representation Of The Employment Crisis In This Country”

Wolf Richter's picture

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

The civilian labor force in the US has been causing bouts of hand-wringing and head-scratching. It represents the official number of people working or looking for work. It’s what the official unemployment rate (U-3) is based on. If labor force participation drops – if for whatever reason, millions of people are no longer counted as part of the labor force, as is the case in the US – it’s a troublesome indicator for the economy and the real employment picture.

It also makes the unemployment rate, now 7.3%, look a lot less awful: if you’re not counted in the labor force, and you don’t have a job, you’re not counted as unemployed. There are millions of people in that category. And their numbers are growing, not diminishing.

“The irony of the U-3 unemployment statistic is the fact that while unemployment has gone down 30% since its 2009 peak, we have the lowest labor force participation rate in over 3 decades,” observed Ralph Dillon, Vice President at Global Financial Data, in an email. “The markets and politicians celebrate the official unemployment rate, but you have to be concerned with the trend that is most indicative of the health of the employment situation in this country: the downward trend of those who want to work and can’t.”

Before the financial crisis, the unemployment rate and the labor force participation rate weren’t correlated. Unemployment would jump up and down, based on the economy, but labor force participation moved to its own drummer:

“During the 1970s and 1980s, the labor force grew vigorously as women’s labor force participation rates surged and the baby-boom generation entered the labor market,” explained the Bureau of Labor Statistics. The labor force participation rate hit an all-time peak in early 2000 of 67.3%. “However, the dynamic demographic, economic, and social forces that once spurred the level, growth, and composition of the labor force have changed....” And labor force participation has since dropped to 63%.

The chart (Global Financial Data) juxtaposes the unemployment rate and the labor force participation rate since 1980. After the financial crisis, suddenly, for the first time in history, they both started moving in lockstep. Downward.



“This chart is a true representation of the crisis of employment in this country,” Dillon wrote. The diminishing labor force participation rate – the officially available labor pool, however unrealistic it might be – has been driving down the unemployment rate for the first time in history.

But beneath the overall numbers, it’s even worse. This chart by the BLS depicts labor force participation rates in 1992, 2002, and 2012, with an estimate for 2022:



People 55 to 64 years old, the first forget-about-retirement generation, are staying in the labor force to an ever greater degree. In 1992, only 56.2% were still in the labor force, in 2012, 64.5% were. Similar for older folks. The participation rate for people 65 to 74 years old jumped from 16.3% to 26.8%. Reality is this: fewer people can afford to retire.

But who is not making it into the labor force? Young folks. The participation rate for those 16 to 19 has plunged from 51.3% in 1992 to 34.3% in 2012. OK, the BLS explains that by an increase in school attendance, and that would be a good thing. But the 25 to 54 year olds? Even among them, participation rates dropped from 83.3% in 2002 to 81.4% a decade later.

Among the 18 to 34 year old “Millennials,” those lucky ones who’re official counted in the labor force, unemployment has been a nightmare, with double digit unemployment rates, still, nearly 6 years after the financial crisis, reported the youth advocacy group Young Invincibles. It’s even worse for the 16 to 24 year olds, whose official unemployment rate is still 15%!

In prior downturns, the employment rate for young adults nearly reached pre-recession levels within 5 years. In the Great Recession, young adult employment had not even recovered halfway by the same point. A quarter of all job losses for young adults came after the Great Recession was officially over. The lack of jobs had driven many discouraged young people from the labor force altogether. A recent report by Opportunity Nation estimates that 5.8 million young adults are neither working nor in school.

Sure, companies have been creating jobs since the Great Recession, but only at the growth rate of the working-age population, as evidenced by the BLS’s dreary employment-population ratio. It peaked in April 2000 at 64.7%, crashed during the Great Recession, and has been skittering along the bottom ever since. At 58.6%, it’s lower than it was during most of 2009! And the 30% improvement in the official unemployment rate – where the heck did that come from? The chart has the answer: people 54 and younger being statistically purged from the labor force.   

Fed Chairman Bernanke wanted to reflect on the “accomplishments of the past eight years” and demolish “sceptics” that still doubted the Fed was the best thing since sliced bread. His policies “have helped promote the recovery,” he said. The recovery of what? Read.... Bernanke’s Delirious Praise For His Handiwork, The Concentration Of Power At the Top Banks

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mike Cowan's picture

Damn I do waste time here.

ebworthen's picture

Thank you.

Anyone paying attention knows that employment sucks, but your cogent analysis and clear charts helps one to maintain sanity as the MSM belches forth their incessant "recovery is here" fog.

q99x2's picture

Man I hope they have some dynamite acid and rock n roll by 2022.


Clowns on Acid's picture

Fuck you Ben Bernanke, Goldman Sachs, Lloyd Blankfein.  2013 will remember you.

2014 - Fuck you Janet Yellen, Goldman Sachs, Lloyd Blankfein.  

Wilcox1's picture

So the big front office guys finally learned how to game the system like they been making their line guys do in the forever past.

world_debt_slave's picture

yeah, moved at 49 years old to a better state, worked part time service job for over a year until landing a fed job.

Mojeaux18's picture


This is:

FRED Graph - Civilian Population Ratio (EMRATIO)



Kayman's picture


I am amazed that chart isn't on the Official Secrets list. 6 private sector people working for every 4 government ?  And private sector includes financial skimming and churning...

Who the hell is left working in this country ? 

Musashi Miyamoto's picture

Labor Participation Rates don't factor black market and cash labor. The "lost 3 million" have gone Galt even if there were jobs they are fed up with the machine


The Wisp's picture

My Buddy, 45 just got laid off never saw it coming. he's coming over to drink beer tonight and ask advice, I'm older and Wiser. I've seen it all.

  what he really needs is some frugality lessons, hopefully this gives him some

Dinero D. Profit's picture

So, your 45yo buddy needs some inspiration. 

Here's what:  He could be front running mj legalization.  He should become an intern in Denver.

Also, he could be front running the vegatable gardening baloon.  A consultant/GC for starting backyard veggie gardens.

If he is living near the borders, he should consider smuggling.  When the shtf there will be all kinds of relative scarcities, like bullets for one.

Old prople need help in insurance matters.  Avoiding the mindless beauracracy is absoltely priceless.


(Ut oh. The wife just put the bacon on.  ttfn.)  

rsnoble's picture

My advice...........fuck it. Keep drinking beer. It's over.

Hongcha's picture

Start with "lay off the booze" and I mean completely.  He will be lucky to find a job that pays enough per hour to buy (1) six-pack.

PT's picture

Tell him to brew his own.  Could be a new source of income.  Or the closest he gets to printing his own money.

Long little bottles. 

geno-econ's picture

What is difference between laid and layed ? The former is more fun !

Tall Tom's picture

You get your jollies from spelling words correctly instead of incorrectly? LOL Whatever rocks your boat...

geno-econ's picture

Only when it's funny, as in good humoure but it's always the thought that counts without offending. High national unemployment is offensive anyway you spell it

geno-econ's picture

Unemployment benefit rational was originally based on the premise that productivity gains would more than cover the cost of unemployment checks and provide time for the unemployed to find another job or retrain for another line of work . The original premise no longer applies.
For every job lost in the US , two are created in China or elsewhere as the "invisible hand " in the private sector encourages. In addition much job subsidization will be reduced as the military unwinds and pork in Home Land Security comes to an end. What is left is wishfull thinking and fantasy job promises by polititions such as the announcement by Pres Obama today. Additionally QE has been a total failure in creating jobs but a huge success in preserving salaries and bonuses for the financial sector with consequential income disparity. The Fed of coarse has an unemployment mandate which takes the heat off political leaders in exercising Economic Planning in an effort to create jobs . It does seem we are indeed at a crossroad where discontent and pretension must collide.

ItsDanger's picture

So the basic pattern only materially deviates in the last 4+ yrs or so.  Connection to Obama?  LOL.

irongator's picture

The death panels will help by systematically lowering the average life span... Bingo. Entitlement problem solved!

Wilcox1's picture

Yeah, the doctors ask a senile person if they want to be treated.  The senile person says no. End of story.

HardlyZero's picture

What happen when all the US doctors form a loose union and their own heathcare system ?    Will ACA need to transfer ACA and medicare patients to the Bahamas or Canada for surgeries ?

Cannon Fodder's picture

I wonder what that those charts will look like when they "amnesty" all those "undocumented" people....

Rising Sun's picture

fuck work


Barry sends me FEWD STAMPZ and OBURPO-CARE.

kaiserhoff's picture

A few steps in the right direction, but you really need to do the politically incorrect thang, and look at employment trends among white men 25-60.  That's the real loss of productive capacity. 

That and the lost generation, who can't get a start in life. 

SurlysonofaBitch's picture

F$@# 'em; they all voted for Obama.

Rusty Diggins's picture

I keep practicing


"welcome to Walmart....wheeze"

curiosul's picture

I'm 35 and I can't see myself retiring unless I can't work. I can't see myself idle in the house waiting for death.

I also can't understand my retired parents (64 and 60). They say they were tired/sick of going to work and now they stay in the house all day long watching TV.


But that's just me ...

PT's picture

Some oldies are busier after they retire.

AGuy's picture

"I'm 35 and I can't see myself retiring unless I can't work... [Parents] say they were tired/sick of going to work"



When you realize the fruit of your labor is supporting free-loaders, you become disenfranchised about working. Remember, every dollar you earn gets taxed and every tax dollar is used to take away your liberties. At some point, you throw in the towel and do something else. For me, I am going Galt. I will work, but it will be for myself by growing my own food and being self reliant. I no longer have the interest of drive to go into a job where 60% of my pay pays for federal and state taxes. Retirement doesn't mean you have to sit in front of a TV or a computer all day! Its up to you to decide what you want to do.

GeezerGeek's picture

It sounds like your parents were able, financially, to retire, so why work? OTOH, sitting around all day watching TV is a fine way to enjoy a short retirement. It would be much better if they spent all day reading ZH and making pithy comments, right?

Retired myself - my job went away just befrore turning 65, and no IT manager wanted to hire someone more competent/experienced than they were - I'm busy doing physical work perhaps 4 hours a day. I just don't get paid for it. Referring back to the article, the chart showed an increase in anticipated 75-year-old workers come 2022. Wow, I'll be 75 most of that year. Better start brushing up on node.js or some other cutting edge technology in case my money runs out (or is bailed in) by then. Or maybe I'll start my own tech company and offer SaaS to the world. That's short for "Spying as a Service" I'm referring to.

AGuy's picture

"Better start brushing up on node.js"


I am confident by 2022 node.js will be replaced by something else. Web interfaces are born and die in just a few years.

"Or maybe I'll start my own tech company"

A better idea. But you probably have to do something else beside Tech. Obama/EPA has mandated all Coal power plants to shutdown by 2022 (since no coal plant will be able to meet the regulations that take effect by 2022). FWIW: 43% of US electricity is generated from coal. So no more server farms after 2022! I would imagine the cost of electricity will rise to $1 or more per KWh (in 2014 dollars) with permanent rolling blackouts.

Hedgeless Horseman has the right idea. Buy a some rural property and grow your own food. First you won't have to guess at the franken-food your eating, and second the physical labor will prevent you from morphing into a couch potato.




Kayman's picture

What is carefully ignored by government propaganda is that the people that cannot afford to retire are Private sector employees. Private Sector employees continue to work long after retirement age so that Government workers have a tax base to keep their excessive government  pensions.

hootowl's picture

Anybody over 60 who is working and paying income taxes is an idiot.

kchrisc's picture

At least private sector employees, generally speaking, will have skills to market and build with. There is going to be a lot of despair by ex-government maggots when the US turd finally flushes itself.

Selling one's 'skills' as a goverment hack to the very folks that you leeched off of will be challenging at best.

"Ex government parasites need not apply."

AGuy's picture

"There is going to be a lot of despair by ex-government maggots when the US turd finally flushes itself."


Probably not. Gov't workers have the guns and make the laws. Private sector workers are being funnelled into virtual gulags, buried in debt, and no opportunities to escape. Note the death of the middle class and the rising ranks of those living in poverty. The reason why older people are still working is that they are trapped in a gulag!


"Ex government parasites need not apply."

I am not sure why you think the overlords would consider joining the rank and file! The politicians make sure the Gov't workers who oversea the peons (private sector workers) are well taken care of!



LawsofPhysics's picture

I know several venture capital guys in the private sector that would disgree.  Wake up, if you are in the "private" sector but own a few congressmen, you are doing just fine.  Wake the fuck up and smell the fascism dipshit.  The "goverment pensions" won't buy shit when the dollar dies.  Can you say corporate bailouts?  I knew you could.  All those investment bankers are also in the "private" sector, you really think their retirements are bad?  Tell us, what bank do you work for troll?

Kayman's picture

Laws of Physics- by definition: A government body at rest remains at rest until retirement.

I don't work for any of the government subsidized cronies of whom you speak. Anyone with a speed dial to Washington isn't  "Private sector".

  But I do work for myself and have made a payroll twice a month for 33 years.

Without government (the Fed and neverending deficits)  your venture capital guys might have to learn to work for a living.

Get your nose out of the trough and respect your private sector neighbors, especially private sector working people, that don't have a soft landing pad when/if they retire.

And work for a bank ? I couldn't stoop that low.


OutLookingIn's picture

Ditto, fab, jobber shop.

Happy , talented employees, paid ontime. All of the time.

Tough times, drastic downsize. Now in a small converted garage. One man operation except when a big job comes in, which only happens rarely now. Will work until drop dead. Cash jobs get priority! All that talent and expertise is going to waste. No one to pass the knowledge to. What a shame. Will be a nation of dummies in the future.

smartstrike's picture

Ask all the "young" and retired people on the golf-course one sees during the day, what government dollar pensions can buy now." Wait, let me tell you: McMansions, Lamborghini, Victoria Secret models, WF Market shopping, Mayo Clinic, winter vacation homes in Aspen, summer vacations homes in the Riviera, luxury yachts....I better stop now.

shepherd's picture

Lol. Fascism. It's capitalism, pal.


Capitalists buy politicians, that's what they have always done.

analyzer_66's picture

Right but only fascists kill off interest rates and run zirp policies ad infinitum. Genuine capitalism features market floated interest rates that are a true cost of capitalism.

PT's picture

Genuine capitalism exists only in the same realm as fairies, rainbow unicorns and benevolent kings.  The rest of us have this:


MeelionDollerBogus's picture

no, it's FASCISM, merger of corporation & government.
That's not any form of capitalism.

What is Fascism - John T Flynn - Von Mises institute - youtube

shepherd's picture

Yeah, Bogus. Keep believing what other people tell you.


MeelionDollerBogus's picture

You don't get to just make up your own definition of capitalism when it's opposite of the entire world history of knowledge of what capitalism is.

It's worse when your definition already matches an existing definition for something else, in this case, Fascism.

Face it - you produced a Fail.

Own it.

PT's picture

Fascism occurs when the top capitalists buy the government.  From their point of view, it is a free market transaction.  But squabbling over the details is a bit irrelevant when you consider the greater picture.  Don't hold your breath while you wait for your perfect idea of capitalism to materialize.  Start here:


That is what you are really up against.  Good luck.

MeelionDollerBogus's picture

never. So long as there are no corporations there is no Fascism. It's a mandatory requirement, like having gravity requires there be mass involved.

I told YOU where to start, you don't tell me.

http://youtu.be/4Ml7-aDXrgQ : What is Fascism, John T Flynn.

THAT is what you are really up against. Learn it for real this time.

Tall Tom's picture

Keep redefining that which is inconvenient. You must work for the people whom brought you MOPE.