29/4/20: Surprising Effects of COVID19 on U.S. Labor Force

Mid-run COVID pandemic effects on U.S. employment, unemployment and labour force participation rates via: https://voxeu.org/article/labour-markets-during-covid-19-crisis-preliminary-view

The striking collapse in estimated participation rate is down to several factors, some expected, some less so. Per authors:

"Why do so many unemployed choose not to look for work? ... Prior to the crisis, most respondents out of the labour force claimed that it was because they were retired, disabled, homemakers, raising children, students, or did not need to work. Only 1.6% of those out of the labour force were claiming that they could not find a job as one of their reasons for not searching. At the height of the Covid-19 crisis with a much larger number of people now out of the labour force, we see corresponding declines in the share of homemakers, those raising children and the disabled. However, we see a large increase in those who claim to be retired, going from 53% to 60%. This makes early retirement a major force in accounting for the decline in the labour-force participation. Given that the age distribution of the two surveys is comparable, this suggests that the onset of the Covid-19 crisis led to a wave of earlier-than-planned retirements. With the high sensitivity of seniors to the Covid-19 virus, this may reflect in part a decision to either leave employment earlier than planned due to higher risks of working or a choice to not look for new employment and retire after losing their work in the crisis."

This is interesting and far-reaching. If true, such changes provide some - rather substantial - clearing of the path to promotion and career advancement by the older generation of GenX-ers. But it also might be a feature of the COVID-relted layoffs that could have been accompanied by the longer-term jobs destruction in sub-occupations and sub-sectors that tend to simultaneously attract senior or in-retirement workers and be associated with higher degree of person-to-person contacts, e.g. in basic services.

Either way, the implications for the younger generations of the COVID19 crisis remain highly uncertain, but for older generations, earlier retirement and forced retirement is usually associated with lower income in retirement. After all, people in retirement age were not working for purely social reasons before COVID19 pandemic hit.

31/8/2014: QNHS by Principal Economic Status: Unemployed, Working & Retired

Previous two posts covering QNHS release for Q2 2014 provided analysis of

• Unemployment and Participation Rates: http://trueeconomics.blogspot.ie/2014/08/3082014-both-unemployment-and.html
• Duration of Unemployment, including distribution by Age Cohorts: http://trueeconomics.blogspot.ie/2014/08/3082014-irish-unemployment-plight-of.html

Now, let's take a look at the principal economic status of working age population in Ireland (age 15 and above):

• Total number of individuals of age 15 and above residing in Ireland decreased from 3,596,500 in Q1 2014 to 3,593,900 in Q2 2014 a drop of 0.14% on Q1 2011 when the current Coalition Government came to power, following a 0.07% decline recorded in Q1 2014. Year-on-year, the number of residents that are economically active or potentially active was up 0.21%.
• Of the above, population at work rose from 1,834,300 in Q1 2014 to 1,842,600 in Q2 2014. Year-on-year, number at work rose 2.17% which is below a 2.73% rise y/y recorded in Q1 2014. Compared to Q1 2011, current numbers at work are up 2.31%
• Numbers of unemployed fell to 298,100 in Q2 2014, marking a y/y decline of 9.67% and the first quarter since Q1 2009 that the numbers of unemployed fell below 300,000. However, rate of decline (y/y) in Q2 2014 was lower than in Q1 2014 when the levels of unemployment dropped by 10.43%. All together, these are healthy numbers, with current numbers of unemployed 18.49% below those recorded in Q1 2011.
• Student numbers fell 0.89% y/y in Q2 2014, slightly slower rate of contraction than recorded in Q1 2014 (-1.26%). 
• Numbers of those engaged at home rose from 476,100 in Q1 2014 to 478,100 in Q2 2014, but are down y/y some 1.77% and are down on Q1 2011 by 9.83%.
• Numbers of those retired from employment stood at 410,500 in Q2 2014, up on 407,200 in Q1 2014 and up 1.61% y/y. The numbers of retirees are up 17.86 on Q1 2011 and there is a distinct pattern of higher levels of retirees in the economy since the onset of the crisis (see chart below). Prior to the crisis, numbers of retired in the economy were averaging around 300,300 in 2007. In last 12 months these averaged 402,300. Retired persons are not counted as unemployed, even if they took early retirement and are available for work, so early retirement schemes deployed in the public sector on a grand scale in recent years are de facto schemes that superficially reduced unemployment, while increasing real dependency ratios in the economy as a whole.
• 'Other' category - capturing those who are not unemployed officially and do not work for reasons other than being students, being engaged at home or retired - rose from 150,500 in Q1 2014 to 152,800 in Q2 2014. However, y/y their numbers dropped 2.21% but Q2 2014 figures were up 1.26% on Q1 2011. There is a similar problem here as the one evident in the case of the retired cohort: in 2007, numbers of those falling into 'other' category were running at an average of 129,100. In the last 12 months period they averaged 152,100 - a rise of 23,000.
• Together, average 12 month period increases in retired persons and 'others' compared to 2007 are around 130,000. 

Good news: proportion of those classified as being at work as percent of total population of age 15 and older rose in Q2 2014 to 51.27% from 51.0% in Q1 2014 and compared to Q2 2013 when it stood at 50.29%. H1 2014 average is now at 51.14% which is higher than the proportion of those at work recorded in H1 2011-2013.

Proportion of those not at work fell to 48.86% in H1 2014 from 50.02% in H1 2013. Which is also good news. But, consistent with the earlier mentioned trend, proportion of those in retirement rose to 15.59% in H1 2014 from 15.34% in H1 2013 and is now at its highest level since the records began in Q1 1998.

Finally, a chart to illustrate rates of change (year-on-year) in numbers at work and numbers of those not at work:

In level terms, in Q2 2014 compared to Q2 2013:

• Population age 15 and over classified by all principle economic status rose 7,600 
• Numbers at work rose 39,100
• Numbers unemployed fell 31,900
• Student numbers fell 3,700
• Numbers of those engaged on home duties fell 8,600
• Numbers of those in retirement rose 6,500
• Numbers of 'others' rose 5,900
• As the result of the above, numbers of unemployed, retired and 'other' fell 19,500 in 12 months through Q2 2014.