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Employment data much worse than reported.

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May 03, 2008 – Comments (7)

News is reporting that the job cuts in April were not as bad as expected, only 20,000 jobs lost compared to the 80,000 feared.  But, there have been 321,000 jobs lost since the beginning of the year.

This is population pyramids for the US, and incase the link doesn't work I am copying them into a docstoc page.  I find using docstoc when you have a few graphics way easier.  So, the docstoc has graphs of population pyraminds from 1950, projected to 2020, by 5 years.  You can go to the link and look at the inbetween years or you can set it up to have a look at a dynamic population pyramid, where it is changing.  With all the years the document was 24 pages   The changing demographics are enormously important to include in analysis of where the economy is heading.


Population Pyramids US - 1950 -2020 by 5 years - Get more documents 

Employment data is so dramatically changing in terms of what it is measuring relative to population and social programs, it is insane the weight that is put on it in the news.  I consistently find main stream media so lacking and shallow in its reporting and constantly demonstrating far too shallow understand of an issue to be asking the right questions.  

I've been working on getting population data to report actual numbers and I am shocked by what I found, absolutely shocked.  We have an aging population right?  That means the percent of people 65+ should be increasing, right?

I was only able to get population data back to 1996, but this is what I found for percent of population 65 and older:

1996 - 12.65%

1997 - 12.59% 

1998 - 12.53%

1999 - 12.45%

2000 - 12.42%

2001 - 12.39%

2002 - 12.36%

2003 - 12.36%

2004 - 12.37%

2005 - 12.41%

2006 - 12.45%

2007 - 12.57%

2008 - 12.73%

Until this year the percent of people 65 and older has been less than in 1996.  I find this utterly shocking.  Our health care budget has increased out of control as a percent of the budget and I thought it was because the percent of the population over 65 was increasing.

Well, that kills part of an argument I was going to use here...

But, simple extrapolation here, the increase percent of population retirement age from 2007 to 2008 is 0.16% or almost a half million people.  It is actually about 40,500 jobs/month that can disappear through attrition of the aging population and they don't show up in the job loss data.  The population increase from 2007 to 2008 is about 2.7 million or about 224,000 per month.  About 60% are working age, so about 134,000 jobs/month are needed just to keep up.

Something else to notice here, look at the jump in retired aged people from 2007 to 2008.  That kind of jump hides job losse.  Right now it is hiding 40,500 per month, but it looks like that number is increasing.  This number is a double whammy because the stress on the social system is far more expensive from a retired person than an unemployed person.  Consider the average life expectancy of about 84, it might be consider a 20-fold whammy, and included medical, a 100-fold whammy.  An unemployed person can collect benefits for what, six months?  The average senior is collecting benefits for almost 20 years now.

7 Comments – Post Your Own

#1) On May 03, 2008 at 9:14 PM, EScroogeJr (< 20) wrote:

The economy is not producing anything that could be worth $14 trillion. We get our food produced by 1% of the population, we get our consumer toys from China  essentially for free (print dollar bills, give them to the Chinese in exchange for the toys, then devalue them through inflation), we emloy some more people in legitimate service industries, and then we employ the rest of the workforce in the industry of figuring which one of the non-producing members of the society like themselves is entitled to a larger quantity of Chinese consumer goods they haven't earned, and of enabling those individuals to count, collect, multiply through investing, and protect from each other their claims on Chinese consumer goods they entitled themselves to. It's a miracle that we still have any jobs at all.

Seriously, though, you cannot multiply the total population increase by 60%. Instead, you should take the actual number of people entering the productive age. Then again, this is only the first approximation. In the second approximation, you should take into account people under 18 with temp jobs, and people over 18 who choose to go to college to get a better idea if the  available workforce is expanding or shrinking. You should also count the people who choose to work past retirement age instead of assuming that they all retired and their jobs were lost to attrition.

 

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#2) On May 03, 2008 at 10:14 PM, AnomaLee (28.47) wrote:

"I consistently find main stream media so lacking and shallow in its reporting and constantly demonstrating far too shallow understand of an issue to be asking the right questions."

Well... you should know that if the mainstream media let you down here then you're in for a lot of disappointment 

I don't know the basis of your age 65+ but it's not going to work for those years because the wave of post-WWII baby-boomers are just beginning to retire and it WILL begin to show a dramatic increase for the next decade and beyond (highly dependent on healthcare factors - especially from some of the most basic things as nutrition, exercise and preventive treatment such as flu vaccines)

I thought you might find this article interesting since aging is occurring globally and Japan is facing the worst situation, although Canada is supposedly to surpass them by 2032.

Population Growth Trends & Global Investing 

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#3) On May 03, 2008 at 10:41 PM, dwot (40.39) wrote:

Love the description of the economy there EscroogeJr... 

I took the 60% right off the census data and I should define working age as 20-64.  I suppose that 100,000 new jobs per month comes from that they are not all working or intending to work.

For 2006 the data give 59.97%, 2005 59.87, 2004 59.75...   This figure is changing in response to how those entering and leaving the 20-64 age group is changing.

I went back and looked at the data further.  I was quite shocked to see that as a percent the 20-64 age group was increasing slightly for about 10 years there.


Ratio working age to retired age - Get more documents 

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#4) On May 04, 2008 at 12:33 AM, dwot (40.39) wrote:

Interesting link anomalee

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#5) On May 04, 2008 at 4:56 PM, abitare (31.21) wrote:

good post discussion and links. Thank you.

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#6) On May 05, 2008 at 7:02 AM, TMFDeej (99.43) wrote:

Great stuff, dwot.  I know that you read my latest blog post.  I completely agree, the government's employment statistics are completely worthless, other than the fact that they move the market for a day or two. 

The aging population is going to be a huge problem in the near future.  I think that the book on this subject that I have been looking forward to is finally out: 

While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis

Lowenstein is a great author.  I really enjoyed his book on Buffett and When Genius Failed.  Hopefully, I'll be able to hop on over to the store and pick up a copy today.

Deej

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#7) On May 05, 2008 at 8:55 AM, dwot (40.39) wrote:

Deej, I forget what bookstore is...  Kidding, but there sure aren't any here.

I am still fascinated by the river that you just can't tell is a river anymore if you look at the pictures from last post.  That's broken up ice that has filled it.  I wonder how long it will take to melt enough to break up. 

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