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Higher Employment Levels Not Energizing The Economy

Summary:
Written by Steven Hansen I have written on many occasions about the economic reset which occurred somewhere around the turn of the century. Inflation adjusted family incomes and prime age employment have little changed since 2000. Follow up: I am a boomer. I have seen much better economic times. I know that demographics are part of the negative dynamics affecting the  current economy. For instance, the population of the 25 to 54 age group in the USA has increased only 5% since 2000 - versus 16% for the population overall.  Before 2000, at least as far back as the 1950s, total employment grew faster than population.  See graph below.  Since 2000, population has grown faster than employment. Further, the employment level of this 25 to 54 prime working-age group is unchanged since 2000. I smile when I hear economists lecturing China for them to revamp their economy from an export driven to internal consumption - but who lectured the western economies to prepare for the demographic shift. Negative dynamics need to be countered by positive dynamics. Is / were there no economic remedies to mitigate the affects of an aging population? The big problem facing America is not the Russians, or drugs, or even immigration - but it is the economy.

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I have written on many occasions about the economic reset which occurred somewhere around the turn of the century. Inflation adjusted family incomes and prime age employment have little changed since 2000.

Higher Employment Levels Not Energizing The Economy

Follow up:

I am a boomer. I have seen much better economic times. I know that demographics are part of the negative dynamics affecting the  current economy. For instance, the population of the 25 to 54 age group in the USA has increased only 5% since 2000 - versus 16% for the population overall.  Before 2000, at least as far back as the 1950s, total employment grew faster than population.  See graph below.  Since 2000, population has grown faster than employment.

Further, the employment level of this 25 to 54 prime working-age group is unchanged since 2000.

I smile when I hear economists lecturing China for them to revamp their economy from an export driven to internal consumption - but who lectured the western economies to prepare for the demographic shift. Negative dynamics need to be countered by positive dynamics. Is / were there no economic remedies to mitigate the affects of an aging population?

Higher Employment Levels Not Energizing The Economy

The big problem facing America is not the Russians, or drugs, or even immigration - but it is the economy. The government seems not know how the economy really works, and is filled with spin on what is going on, spin which satisfies a political-social agenda. This is why every Congress and administration tries to focus on the private sector - as they do not know how to manage the economy using fiscal policy.  [IMO, many theories on fiscal policy seem not to work as intended].

No politician should brag about how well the economy is doing.   The laws, spending and taxes (fiscal policy) come from Congress - not the President. Even funding for federal government employment comes from Congress.

The media is no better than Congress in understanding economic mechanisms.

From Business Insider:

On Monday, President Donald Trump signed an executive order freezing all federal government hiring with the exception of the military.

In a press conference on Monday, White House Press Secretary Sean Spicer said that the hiring freeze was due to "dramatic expansion of the federal workforce in recent years".  Spicer later said that the increase in the size of the federal workforce has been a source of government waste in recent years.

The only problem with this reasoning is that the workforce of the federal government is roughly the same as when President Barack Obama took office and much lower than in decades past. 

It is true that the size of the federal government workforce is roughly the same as when President Obama took office, but the rate of increase of the workforce in the last two years has accelerated.

Higher Employment Levels Not Energizing The Economy

I can spin the Federal employee situation many ways - even showing how the levels are too low.  Hiring freezes are not uncommon in the real world. The primary reason for hiring freezes precedes a systems review. The overall staffing levels in the government may be ok, but how the jobs are allocated may not be correct. When a new administration comes in, a top-to-bottom review is logical. Historically, USA Presidents tend to be politicians - without experience in managing large organizations.

Other Economic News this Week:

The Econintersect Economic Index for January 2017 again insignificantly improved with the economic outlook for weak growth. The index remains marginally above the lowest value since the end of the Great Recession. But there are indications of better dynamics in our index in the future. Six month employment growth forecast indicates little change in the rate of growth.

Bankruptcies this Week from bankruptcydata.com: Jakarta, Indonesia-based PT Bumi Resources (Chapter 15), Forbes Energy Services

I didn't think about something when I reviewed the weekly - the employment-population graphic could be misleading.

Population and employment are not rising at the same rate.

Higher Employment Levels Not Energizing The Economy

The employment scale (70 m to 130 m) covers an increase of 86%.

The population scale (220 m to 340 m) covers an increase of 55%.

Thus the graph appears to indicate they both average to the same rate but employment is increasing about 1.5 times as fast.

You didn't say in the text the rates were the same; but the choice of the 2 z-axis coordinates makes it appear that way.  Maybe add a clarifying note?

Possibly point out that the employment to total population ratio was about 0.33 in 1979 and has increased to approximately 0.38 today.

The other problem I have is how to square your graph with the employment to population (16 and over) ratio - https://data.bls.gov/pdq/SurveyOutputServlet. I think it is simply a matter of the limited range of the z-axis in the graphic below.  I think the two graphs are actually very similar, differentiated in appearance by the selection of axes scales.  If you agree perhaps a note in your article would be appropriate.

A curiosity here is that the ratio of employment to population 16-and-over is today very similar to that in 1979.  This is different from the increase in the total population ratio.  That probably represents the relative decline in the under-16 population between 1979 and 2016, but I have not run the numbers.

Anyway, I think a couple of notes added to your article would improve it and keep some readers (who are as sloppy as I was last night) from jumping to the wrong conclusions.

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