Comparing Half-time in America to Morning in America

The Bureau of Labor Statistics just released another solid jobs report, for February.  The labor market is recovering from the recession, but payroll employment is growing much more slowly than it was in early 1984.  Moreover, the unemployment rate remains stubbornly high relative to 1984 and previous recoveries.

Payroll employment grew by:

  • 926,000 jobs in the first two months of 1984 or about 1.0 percent
  • 511,000 jobs in the first two months of 2012 or about 0.4 percent

Employment grew 2.5 times faster in early 1984 than in early 2011.  Payroll employment needed to increase by 1.33 million jobs rather than 511,000 jobs in the first two months of 2012 to be comparable to 1984.

The current unemployment rate of 8.3% is slightly higher than the unemployment rate of 7.8% in February, 1984.  The natural unemployment rate in 1984 was higher because the workforce was less mature.  Younger and less experienced workers tend to have higher unemployment rates because they are often switching jobs.  It is therefore more accurate to compare unemployment rates by age group.

The table below shows that, age-group by age-group, the unemployment rate in 2012 is 0.7% to 4.4% higher than in 1984.

Age Group

Unemployment Rate February 2012

Unemployment Rate February 1984

Difference

16-19

23.8%

19.4%

4.4%

20-24

13.8%

11.7%

2.1%

25-34

8.7%

7.9%

0.8%

35-44

6.8%

5.3%

1.5%

45-54

6.4%

5.0%

1.4%

55-64*

6.1%

5.4%

0.7%

65-69*

6.5%

3.9%

2.6%

*Not Seasonally Adjusted for these Age Groups

 The unemployment rates of young workers and seniors are much higher today than in 1984.  The unemployment rate of prime working age adults, age 35-54, is about 1.5% higher than in 1984.

Despite a few solid jobs reports, the labor market recovery remains weak by historical standards.  Employment growth is not as robust, unemployment rates are higher, and a higher fraction of the unemployed have been out of work for at least six months compared to earlier recoveries

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