Submitted by Ralph Dillon via Global Financial Data,
Lately, much has been made about Unemployment and Labor Participation Rates here domestically in the United States. With unemployment steadily ticking down from 10% at it peak to just 6.5% today, many point to the improving economy as a reason that the Unemployment Rate has been steadily improving. While it makes for good political theater, the reality is that we are suffering from an employment crisis in this country not seen in nearly 3 decades.
The problem we face, is that while unemployment has been creeping down, the number of those currently in the labor force has also come down. Frankly put, people who would like to work can’t. They are having a very difficult time finding work and keeping it. With the total duration of unemployment now at 101 weeks, that’s nearly 2 years of unemployment, one can hardly find a reason to celebrate 6.5% unemployment.
Now imagine if you will you are in a country like Italy. Italy has certainly had its struggles during the global recession like everyone else, but if you think we have it bad here, look what they are dealing with. With just about a 50% Labor Participation Rate, Italy’s unemployment has soared to almost 13% and appears headed much higher. In looking at the chart below, it appears that that trend is going nowhere but higher. Especially when you factor in the rest of the economic and social issues that the country is facing.
Makes you want to think about all the different ways that the Government keeps statistics on Unemployment and how they use it. Currently, we have the U-1,2,3,4,5,6 classifications depending on which narrative you are looking to exploit. Many would make an argument that if you truly wanted to gauge where unemployment stands today, you would just simply have to count those who are well, unemployed. Pretty simple concept. So why don’t we do it? Probably because our Unemployment would look like Italy’s.
Finally, I think one of the most effective ways of measuring employment is by looking at the Labor Participation Rate. Those who are in the work force who want to work and are fortunate enough to be working and can. I think it paints a much more complete picture of the employment landscape that we are facing. In doing so, I thought it would be interesting to look at Developed Nations Labor Participation Rates to see just how bad we have it. I guess it could be worse, at least we are second in terms of participation at around 64% and not Italy near 50%.
And who do you think has the highest Labor Force Participation Rate amongst the developed countries? The answer may surprise you eh...