What One Low Number Doesn't Show

Floyd Norris doesn't really believe that the low unemployment rate indicates a strong labor markeet:

What One Low Number Doesn't Show - New York Times: Off the Charts By FLOYD NORRIS: IN the summer of 1983, the United States was just starting to come out of a brutal recession and the unemployment rate was 9.4 percent, twice what it is now in a recovery that has gone on for more than four years. But men in the prime of their working lives -- 35 to 64 -- were more likely to have jobs in the summer of 1983 than their successors in that age group are to have jobs now.

That is one reason it is necessary to look beyond the published unemployment rates to get a more accurate picture. The published unemployment rates count as unemployed only those who are actively looking for work. Those who have given up looking, or do not want to work, are not counted. Another way is to look at employment in comparison to the working-age population.... For a long time, the big news there was the influx of women into the labor force....

Even though the unemployment rate last month was 4.7 percent, not much higher than it was in March 2000, the percentage of people working has fallen in every age group except the highest ones. Men and women above 55 are more likely to be working now. Again, it is not easy to tell whether that reflects a greater opportunity or a greater need for income. What that means is that younger people are significantly less likely to have jobs now than they did six years ago. Thus, it should be no surprise that in the Conference Board's consumer confidence survey, the number of respondents who think jobs are plentiful now is barely half the number who thought that in March 2000.

So how can the unemployment rate be so low? Fewer people say they want to work. The labor force -- those with jobs or saying they want one -- is rising at a much lower rate than the working-age population. The rest do not count in the unemployment figures, but that may not mean they are happy about being unemployed.