Has Employment Decreased Over The Last 25 Years?

Question: Has Employment Decreased Over The Last 25 Years?

Answer: [Q:] I really enjoyed your article "Would 0% Unemployment Be a Good Thing?". I've heard though that the unemployment rate is a bad measure of how many people have jobs because there are so many people not counted in the statistic. Is it true that only 60% of Americans have jobs right now? Wasn't this figure over 80% 25 years ago?

[A:] Thanks for your great question. Let's take a look at some of the issues you have raised.

You're correct that there are many people excluded under the unemployment rate. You're correct in saying that the unemployment rate does exclude all sorts of people. The unemployment rate only measures the percentage of people who would like jobs but do not have one. It does not consider someone who is voluntarily without a job. The most common example of this is someone over the age of 18 who is attending college and does not work during the school year.

Because of these exemptions, a 5% unemployment rate does not imply that the other 95% of the adult population has a job. The U.S. Department of Labor has a statistic which they call the "Civilian Employment-Population Ratio" which measures what percentage of people between the ages of 18 and 65 have a job. The data is available for download at the St. Louis Federal Reserve

With this data we can answer your question "Is it true that only 60% of Americans have jobs right now?". As of July 2004 the Civilian Employment-Population Ratio stands at 62.5, indicating that 62.5% of the population current holds a job. This is down from a high of 64.7% in April 2000.

As for the question "Wasn't this figure over 80% 25 years ago?" the data shows this is clearly false. In fact, the percentage of Americans with jobs has been on the rise for the past 50 years, largely thanks to the increasing proportion of women who have entered the workforce. Here are the Civilian Employment-Population Ratio figures for some points in time:

1. January 1950 - 55.1
2. January 1955 - 55.7
3. January 1960 - 56.0
4. January 1965 - 55.7
5. January 1970 - 58.0
6. January 1975 - 56.4
7. January 1980 - 60.0
8. January 1985 - 59.9
9. January 1990 - 63.2
10. January 1995 - 63.0
11. January 2000 - 64.6

As you can see, the Civilian Employment-Population Ratio has been steadily increasing over the last 50 years, but it hasn't been a steady increase. It goes up and down as the economy goes into booms and busts respectively.

By looking both at the unemployment rate and the civilian employment rate we can get a better feel about the nature of today's job market than we can by looking at just one alone. Thanks for your great questions!

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