I just watched a news story saying that unemployment numbers don’t tell the full story because it doesn’t count “non-participants” of which there are 94 million. I didn’t get the full story from it though. How many of these are retired, or students, or stay at home parents? I would imagine a very large number of the non-participants in these circumstances, not just people who gave up on looking for jobs.
The vast majority of them are. The right wing news outlets, which doesn’t like the official unemployment rate being below the natural rate of unemployment of 5%, has focused on labor force participation rate in an attempt to cast doubt on the non farm payroll numbers released every month.
The baby boomers are retiring, if you had copies of 1990s news magazines, you’d see numerous stories of, “What do we do when the boomers retire?” With the economy doing well and 401k balances rebounding after the awful shellacking during 2008-2009, people are leaving the labor force by choice.
From the Bureau of Labor statistics “People who are not in the labor force: why aren’t they working?”
It looks at the reasons given by survey. The “other reasons” is probably the chunk you are try to figure out (not retirements, school, etc.) In 2014 it was still up some (1.2% of those NLF versus .9% in 2004.)
The Bureau of Labor Statistics calculates various Alternative measures of labor underutilization that clearly explain what is counted in which category.
If the news reports on “the” Unemployment Rate, the report is normally referring to the U-3 rate – Total unemployed, as a percent of the civilian labor force (official unemployment rate), and indeed the U-3 rate does not count those who are not looking for work regardless of the reason (by choice, or abandoned hope).
The U-6 rate does include “Total unemployed, plus all persons marginally attached to the labor force*, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force” which is sometimes summarized as including unemployed, underemployed, and those discouraged persons in long term unemployment who have given up hope.
Neither rate counts children under 16 nor elderly retired persons as those are not a part of the civilian labor force.
*NOTE: Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule. Updated population controls are introduced annually with the release of January data.
Natural rate? Cite, please.
I posted this recently in another thread.
Here’s a recent publication from the Federal Reserve Bank of Chicago discussing the economy reaching the natural rate of unemployment in May 2015. Like anything in economics, the rate isn’t gospel. The theory is that if you push unemployment down too low, there is a substantial push higher for wages, leading to inflation.
U6 doesn’t go back very far. I recently calculate the average U6 since it was measured. We’re currently below that average. But I’m having trouble finding the post on my phone.