Thursday, July 27, 2017

27/7/17: The Gen-Lost is still lost...


Today, Marketwatch reported on a research note from Spencer Hill of Goldman Sachs Research claiming that the young workers cohorts in the U.S. have now caught up in terms of employment with older workers' cohorts.

Sadly, the argument is based on highly flawed analysis. The core data presented in support of this thesis is the unemployment rate, as shown in the chart below:

But official unemployment figures mask massive decline in younger cohorts' labor force participation rates, as evidence in this chart from Peterson Institute for International Economics:

In simple terms, when you reduce your employment base by moving people into 'out of workforce' category, you lower unemployment rate.  This is supported by other research, e.g. as reported here: http://trueeconomics.blogspot.com/2017/07/27717-work-or-play-snowflakes-or.html. Skewed, against the Millennials, workplace conditions are also to be blamed: http://www.epi.org/blog/young-workers-face-a-tougher-labor-market-even-as-the-economy-inches-towards-full-employment/. or as highlighted in these data:

Source: https://www.frbatlanta.org/chcs/labor-market-distributions.aspx?panel=1

So, no, beyond superficially deflated official unemployment metric, there is no evidence of the labor force conditions recovery for the younger workers. The Generation Lost is still lost. And that is before we consider the life cycle effects of the crisis.

Post a Comment