Labor Force Participation Rate

Much debate over the forces causing steady falloff of labor participation. New jobs report today shows only 38,000 new jobs, yet 500,000 left the labor force and U/E drops to a new low of 4.7%.

The report showed a broad hiring slowdown, including declines in payrolls in construction, manufacturing and mining. Job growth at private service producers slowed, with employment climbing by just 61,000. That brought the diffusion index, which measures the breadth of hiring, to 51.3 in May, the lowest since February 2010.

I realize this is a RE forum but would love to understand the mindset of some finance folks out there regarding labor, unemployment, baby boomers, government policy, etc.

Is it simply the aging of a nation? Baby Boomers like my folks retiring and skewing the numbers? Or are less people looking for employment?

Here is the full article.

 

It's been a jobless recovery. A quarter or a third of this country isn't employed. Look at the increase in long term disability. Wage growth is stagnant. QE has been awesome for the stock market, but most normal people aren't benefitting.

Results? Trump and Bernie Sanders.

 

All great points. Here is a graph I was looking at this a.m. out of St. Louis Fed Reserve. At 39 and having been in real estate since 1995, shortly after I graduated high school, I've been through a few different economic cycles. All unique in my opinion.

1960-1989 was a massive upswing. I can't speak to my own experience in these economies. But the numbers are clear.

1990 -2000 was unique times. The economy post this mild recession (90-92?) while I was in high school was generally good. But to me 1989 was the end of job participation growth as a whole. After 1990 the only bump was in the Dot Com madness of the summer of 96' - 2000 or so. For those of you not living in this time tech company valuations and VC money was everywhere. The rise of the internet. Zero net income yet stocks trading in the hundreds per share. Also, mass fear consumerism was driving this economy too. Remember Y2K anybody? What a joke. Everyone was buying new computers, washers, dryers and digital clocks cause the Feds said these items won't know how tell time Jan 1, 2000. LOL. Craziest thing I've ever seen.

Meanwhile, today, some old man is still using his computer he bought the summer of 99' just fine.

2000 - 2010. The chart is clear. Despite what was to me and everyone around me a great economy for 8 of these 10 years. Labor participation really began to slide. This was pre QE. Clearly I don't need to go in detail about 2008-2010 ;)

2010 moving forward it's falling off a cliff. This has been a very weak recovery for all the reasons everyone mentioned. Seems like we're closer to negative growth than we are to another bounce up with this economy, wages and true gainful employment.

https://research.stlouisfed.org/fred2/series/CIVPART

 

That's really interesting data. I was talking with my dad about it, his thought was that as women have entered the work force full-time over the last few decades, we've also lost a ton of manufacturing and blue-collar jobs. So essentially now we have more employees than we could possibly have had jobs for, and small business growth has obviously not kept up accordingly to even out the job field.

Anyway, the whole thing made me curious about the macro scale of this so I looked at the worldbank data here(sorted highest to lowest in 2014): http://data.worldbank.org/indicator/SL.TLF.CACT.ZS?order=wbapi_data_val…

It seems like we're not only getting beaten in labor force participation, we're getting our asses kicked by some, what look to me to be, random east African dictatorships. Not to mention Brazil, China, HAITI?!?, I mean, it's an interesting perspective anyway. Not sure what it means, obviously it's a complex issue because I don't think Eritrea has the same standard of living we do, regardless of their 85% labor force participation. I should have paid more attention in Econ....

 

Along with people being "left behind" in the new economy, there is a massive upswing in contract work. I know people who only do contract work on sites like Upwork, Guru, FlexJobs, etc. They make enough from that to live, but they're not really "employed."

Commercial Real Estate Developer
 

No easy answer here. This is a very top heavy issue. So many layers that start at the highest level with the Fed and Feds and slowly works its way in the Psyche and behaviors of the average person.

Now may not be the time, and my personal opinion goes against the CRE crowd. But we need to return to higher interest rates at some point. My first MF deal in 2001 right around 9-11 was 50ltv and 7%. Student housing right next to SDSU. It's not 1982 money but it's not 2015 money either.

I don't think America is ready for 10% consumer rates and 7% real estate money though.

If the only way our economy can survive is with QE and 3% debt, we have a major problem.

There once was a time when housing was up, rates were up. When housing was down, rates were down.

Random thoughts...

 

You're not wrong. America, from what I understand since I was only 7, seemed to do just fine in the 80's with 10% interest rates.

We have a generation of people that think buying houses at 3% is normal, and that you should only have to put 5% down on a house.

Hell you want a $60000 car? Finance it over 10 years, it's like free money at 3%!

This luxury economy we've grown used to just isn't sustainable in the long run. Jamie Dimon said yesterday that someone's going to get hurt regarding the current state of vehicle debt and avg monthly payments. Of course he was referring to the banks, but still, it's not sustainable.

Crazy. It's going to come crashing down. And I'll be sitting here waiting with my pile of cash to swoop in and buy EVERYTHING haha

 
QGKZ:

So what's the solution?

In my speculative opinion and one backed up by no research but based entirely on my own opinion, I think one of the main issues has been the consolidation of jobs due to globalisation.

Let us take the LSE and Deutsche Boerse merger as an example. These are two businesses which cover the same sectors and if combined would cause little disruption to one another's market share but could benefit each other by reducing the amount of staff needed to manage the combined business. This is clear by the fact that they estimate job cuts of 1,250 staff which, according to the FT, accounts for 14.3% of total staff. That is a pretty large number.

This is one example but can be seen in any merger or takeover. Jobs are always cut as company's streamline processes and use existing infrastructure and staff to cover much of the newly acquired business.

This is also partly the fault of us as consumers. We like convenience. Instead of going to the butchers for fresh meat, then to a grocers for fresh produce followed by a stop at the pharmacy for some ibuprofen, we would rather pop down to our local supermarket and get all those things in one place.

So what could be done? Governing bodies could enforce restrictions against these types of mergers and place ceilings on how large a company could grow. They could also force some very large companies to break apart into smaller businesses specialising in certain sectors. In some cases, such as trying to stop banks or insurers from becoming TBTF, this could be beneficial, but in most cases it is unrealistic and would be seen as anti-capitalist. Another way would be to change our own consumer habits by choosing to visit the butcher/grocer/pharmacy etc for our shopping rather than a chain store, but for most of us convenience is too convenient and our time too limited. In the end it's a difficult situation that will only continue to get worse unless some worthwhile discussions are made on the subject.

 
ODS-UK:
QGKZ:

So what's the solution?

In my speculative opinion and one backed up by no research but based entirely on my own opinion, I think one of the main issues has been the consolidation of jobs due to globalisation.

Let us take the LSE and Deutsche Boerse merger as an example. These are two businesses which cover the same sectors and if combined would cause little disruption to one another's market share but could benefit each other by reducing the amount of staff needed to manage the combined business. This is clear by the fact that they estimate job cuts of 1,250 staff which, according to the FT, accounts for 14.3% of total staff. That is a pretty large number.

This is one example but can be seen in any merger or takeover. Jobs are always cut as company's streamline processes and use existing infrastructure and staff to cover much of the newly acquired business.

This is also partly the fault of us as consumers. We like convenience. Instead of going to the butchers for fresh meat, then to a grocers for fresh produce followed by a stop at the pharmacy for some ibuprofen, we would rather pop down to our local supermarket and get all those things in one place.

So what could be done? Governing bodies could enforce restrictions against these types of mergers and place ceilings on how large a company could grow. They could also force some very large companies to break apart into smaller businesses specialising in certain sectors. In some cases, such as trying to stop banks or insurers from becoming TBTF, this could be beneficial, but in most cases it is unrealistic and would be seen as anti-capitalist. Another way would be to change our own consumer habits by choosing to visit the butcher/grocer/pharmacy etc for our shopping rather than a chain store, but for most of us convenience is too convenient and our time too limited. In the end it's a difficult situation that will only continue to get worse unless some worthwhile discussions are made on the subject.

But wouldn't we purposely be promoting economic inefficiency by doing so? This is all a byproduct of improving economic efficiency, which is an overall benefit to humanity. Why should we purposely send humanity backwards? This makes no sense to me.

 

I think the U.S. has incredible potential. We just need to unleash that potential.

It starts with repealing (and replacing) Obamacare, which is a complete disaster and an albatross around the necks of employers and consumers. The Democrats deserve credit, however, for shining a light on the issue. We need to replace Obamacare with something that ensures that everyone who wants health insurance can access it.

Dodd-Frank needs to either be repealed or drastically overhauled. It's making it impossible to operate as a small/community bank, which are the primary lenders to small businesses.

The U.S. regulatory burden is worse than Northern Europe's; in a way, Northern Europe is more capitalist than the United States. We need to make it easier to start and run businesses in the U.S. as new business formation is at decades lows.

We need to roll back the capital gains tax burden. I work for a wealthy family and I can attest that the 23.8% effective rate (compared to the 15% old rate) has had a material impact on their investment decisions. Why would we punish capital investment into the United States? The capital gains tax is the second most illogical tax ever conceived. The most illogical tax the U.S. has is the corporate income tax, which is one of the highest burdens in the industrialized world. We need to roll this back to a competitive level (ideally zero, but realistically, 15-20%).

We need to offer to repatriate the hundreds of billions of idle, offshore dollars at low rates to allow for additional capital reinvestment into the United States.

Finally, we need a national right-to-work law that makes it illegal for unions to force workers into unions. This would make investment into the U.S. much more desirable for domestic and foreign businesses alike.

And, frankly, there's so much more (the Department of Labor under this President is completely lawless and totally dismissive of action/reaction). The U.S. is tying its hands behind its back and going into the boxing ring with China. It makes no sense.

Array
 

Obamacare is an utter and complete trainwreck. I think another one is securities tax- why should trading securities be taxed as much as they are? It sure as hell isn't going to discourage speculative trades from being made and increasing it further as some of the ultra-liberals suggest could possibly discourage investing all together for some people.

 

I know politics is involved here. You cannot discuss employment numbers without politics getting involved. But lets not get too political if possible. I don't want someone to avoid posting cause they fear that we're all CRE conservatives.

Regarding Obamacare. I need to review the 50 employee exemption again. This is a growth inhibitor for sure. I believe companies with less than 50 employees are not subject to provide insurance, in general. So why grow, right? Why go from from 45 employees to 51 if it doesn't make sense.

Obamacare is just one of many many issues affecting labor participation in my opinion.

99 weeks of unemployment benefits during the recession was crazy. Is it still that now? For 5 years people were collecting nearly 2 years of benefits.

Again, all very top down stuff.

 

We have been using low interest rates as a proxy for economic growth - we aren't any more productive, and people aren't actually doing any better but they can feel like it because they are able to afford the monthly payments on things even if they can't afford to buy them. At some point (maybe we're reaching it) monetary policy is going to run out of ammunition and we're actually going to have to rely on congress to change things and make this country more friendly to business. Obviously the big ticket items like high (or any) corporate tax rates, capital gains, etc. are huge problems. But I think that the underlying issue is that there is a HUGE number of people who don't understand how the economy works and are just believing that businesses are just run by evil Monopoly men who are only interested in screwing them. Someone needs to come out as a champion for capitalism and its ability to lift these people up so they can hear another argument than "Bernie will give us free shit."

 

The collapse in the labor force participation rate is the result of ever increasing structural unemployment caused by Obama's anti-labor policies. Specifically, Obama, at the onset of the recession, effectively paid individuals not to work by continuously increasing and extending unemployment benefits. He has also put in place significant pro union policies which, as any standard econ textbook will tell you, limits employment in order to artificially boost its own salaries.

The result is that a large portion of the population voluntarily excluded themselves from the labor force and, in turn, now find themselves unable to compete (discouraged). This is magnified by the large number of "baby boom" retirees. Finally, Obama's recovery is the weakest in modern U.S. history. He is the only president (ever) to not see a single year of 3%+ GDP growth. This also leads to weak demand for employment (magnifying size of discouraged population).

“Elections are a futures market for stolen property”
 

Case in point on rates...

College tuition, something many of you know about. If interest rates were 3 - 4x the rate they are today I firmly believe that tuition would not have exploded. It's like the car lot...salesmen asking you to focus on payment vs cost. Over the years students/families would borrow or pay a portion in cash to attend college. Rates in the teens. Normal interest rate cycles allowed you to get in at a reasonable price but with expensive debt. Sometime over the next several years you took advantage of rates and refinanced to lower rates. This cycle happened many times with many other leveraged items or goods.

In the current low rate environment for essentially a decade, the acquisition price of college and so many other things is justified by the debt service vs the price. I like higher rate cycles. You can change your rate in time. You can never change the price.

 
Simple As...:

The derp is strong in this thread. Do you all even look at data or just parrot GOP talking points ?

There are too many factual errors in this thread to point out and I'm not interested in getting into a political debate, but wages haven't been stagnant:
https://t.co/MXv3EeLoEa

The article you link to actually covers this topic and explains why we've seen record real wage growth:

Importantly, real weekly wage growth has been flattered by persistently low inflation. There is something of a chicken-egg relationship between wage growth and inflation: when prices rise at a fast clip, workers might demand higher nominal wage increases to keep up their standard of living. Increased take-home pay, all else equal, entails that more money is being thrown at the same amount of consumer goods and services, which tends to put upward pressure on prices.

In other words, real wage growth is so good because inflation is so low because the economy sucks. Remember, there are lies, damn lies and statistics.

Array
 

This problem of declining participation is consistent across the last three presidencies. All Two-termers as well. Dems and Republicans. While we can point to some issues on the left and the right, it's clear to me that neither side is doing much to fix this. There must be some other force at play in addition to policy, welfare state, etc. I think @ODS-UK is right. Maybe globalization is essentially forcing the lazy and unskilled out of the workforce. There is now a larger pool of employees to draw from.

 

The finance job market is an absolute bloodbath. Banks and hedge funds are letting tons of people go, and my friends are freaking out.

Overall though I agree with the general sentiment expressed in this thread. Barack Hussein Obama has been terrible for the economy, and his policies have crushed job creation and small businesses.

 
Going Concern:

I'm so happy when folks leave the workforce, more jobs for me to scoop up. Gotta build that massive wall to keep out all the mexicans and robots and I'm set for life

It won't be long before the robots will be building walls around us, fellow ape.

 
<span class=keyword_link><a href=/resources/skills/finance/going-concern>Going Concern</a></span>:

I'm so happy when folks leave the workforce, more jobs for me to scoop up. Gotta build that massive wall to keep out all the mexicans and robots and I'm set for life

Let's keep all the Asians out while we're at it, because we all know that white trash teenage moms and ratchet hood rats aren't going to produce any real competition for jobs. More for us!

 

I see the monkey shit really started flying... So here's a few data points:

Real Personal Consumption Expenditures: https://research.stlouisfed.org/fred2/graph/?graph_id=312139&category_i…

Job openings/hires and quits below: https://research.stlouisfed.org/fred2/graph/?graph_id=312134&category_i… https://research.stlouisfed.org/fred2/graph/?graph_id=312135&category_i…

Median Real Earnings: https://research.stlouisfed.org/fred2/graph/?graph_id=312133&category_i…

Vehicle Miles Traveled: https://research.stlouisfed.org/fred2/graph/?graph_id=303185&category_i…

Employment/LFPR: https://research.stlouisfed.org/fred2/graph/?graph_id=303295&category_i… https://research.stlouisfed.org/fred2/graph/?graph_id=312132&category_i… https://research.stlouisfed.org/fred2/graph/?graph_id=312132&category_i… https://research.stlouisfed.org/fred2/graph/?graph_id=303283&category_i…

HH Debt Service: https://research.stlouisfed.org/fred2/graph/?graph_id=303063&category_i…

Core CPI: https://research.stlouisfed.org/fred2/graph/?graph_id=312136&category_i…

None of these things are indicative of a "terrible" economy. Should corporate taxes be lower? Definitely. Should the capital gains tax be lower? Absolutely. Was QE only good for the stock market? Not in my opinion and what would've happened had we not done it is the mother of all counterfactuals (wouldn't have been good, imho). Can the economy be better? Sure it can. In my opinion we're just muddling along and will continue to do so, but I'm "on alert" for "downside risks." FWIW, here is my rudimentary breakdown on where different aspects of the economy sit right now:

Good: Housing, Consumer Strength, Financial System Stability OK: Auto, business investment Terrible: Energy, mining, exports

[quote=patternfinder]Of course, I would just buy in scales. [/quote] See my WSO Blog | my AMA
 

What exactly are you arguing? You're cherry picking positive data points (actually, what most of your data points show is that those metrics are better today than at the beginning of the recession--congrats), but the core data points--GDP growth and labor participation--you're ignoring. GDP especially is the summation of all of the different data points into a single scorecard about the health of an economy. I think what most of us have said is that the economy is barely humming along despite historical, unprecedented quantitative easing and a doubling of the national debt.

So we've doubled the national debt and inputted countless trillions of dollars into the economy through QE and yet we haven't even hit 3% GDP growth once in this presidency. What does that story tell you? That the U.S. has a lot of untapped potential caused by its bad public policies.

Array
 

What work isn't getting done? What product or service do you want, but can't have due to a shortage of labor?

The fact of the matter is that we have long term structural shifts in our economy due to a combination of outsourcing & automation. There simply isn't enough work for everyone, but we are getting everything we need out of the current labor force.

 

@Virginia Tech 4ever" is correct on this subject. Net business starts has declined for the first time since the data was collected back in the 70s. If you look at the previous 4 or 5 recoveries, none of them has been as slow or as poor as the most recent one between 2008-present. GDP shows how much economic activity is created, mostly consumption and investment spending, but GDP is now at a new 2% or below level.

Wages only increased slightly and it was good news more because most didn't expect it to be .3% and is above any other increase since the expansion started (which is a small number by the way). Consumption spending is weak despite healthier savings among households. Wages just haven't passed down to the poorest earners (the wage increase is from companies hiring more full-time workers and less part-time/temp workers, i.e., same jobs . Housing is only beginning to pick up but still remains weak among new home buyers, which is a problem because it will mean that equity in house values will be depressed by debt well into the years when millenials become more senior, and then the cycle of saddling our children with debt and obligations will continue.

Basically, this expansion has been dismal. It was true before the fall in commodities prices, which has added more downward pressure to the recovery. The Fed is in a position where it is now making decisions as if a gun is to its head because it doesn't know if a move will cause a sharp hit to everyone's purse and cause this fucked up economy to run amock.

We need changes to capitalism because there has been too much liberal expansion of the welfare state. In reality, the debt burden hasn't been abhorrent because the US is a strong economy, which has allowed it to be at the center of world economic activity over the past decades. But that is being challenged now, so much of what we are doing just won't make since after 30 years. Democratic liberalism is old, and if we're going to manage our future well, we need to revamp this broken system to be more flexible as a national economy.

EDIT: To be fair, though, I think if this low growth is the new normal, we are strong now. Unemployment rate and wage increases are showing that. It's just not as fun as the 20th century.

 
Best Response

I'm not going to dispute the stuff VT and simple as have been saying, I just want to make sure people in this thread are educated on what the data are telling us, because I believe a lot of people are spewing political rhetoric based on their own biases without knowing what the economic data actually mean.

let's start here: what is the labor force participation rate?

according to the BLS, it's the labor force as a % of the civilian noninstitutionalized population. the labor force for this rate is ALL persons 16 or over who are not inmates, in the loony bin, in nursing homes, or on active duty in the armed forces. my grandfather is part of the labor force, retired before I entered elementary school. muhammad ali was part of the labor force before he passed away. all of the college kids here are part of the labor force. I feel as though most people think the labor force is only people "of working age," but it's not.

I know I'm not alone in that I worked in high school & college, but many people don't, so is there an argument to be made that the college glut could be partially responsible? sure, that could be a factor. if the millenials include people born up to the year 2000, the youngest ones just entered the labor force, and they will continue to be in school for many years.

what about seniors? life expectancy rose from 65.6 years for men (71.4 for women) in the 50s when the labor force participation rate data started, to 76.4 for men and 81.2 for women (2015 data from CDC). so more people living longer, staying in the labor force, regardless of whether or not they're retired, as long as they're not institutionalized, they're counted. is there an argument to be made for this affecting it? sure!

what about discouraged workers? there's the guy who got his job taken by the illegal immigrant, the guy who was replaced by a robot, and everyone else who feels marginalized for one reason or another. many people point to this figure as the only cause, and it is certainly significant.

and the biggest hot button issue, the economy: the US population has risen from about 250mm people in 1990 to 320mm today, and while the economy grew pretty well during the 90's (lots of 4% growth years), that's not been the case in the last 15 years, so there's certainly an argument that a stagnant economy with rising population is the cause.

and finally, other factors like globalization, technology, automation, and so on. a family member of mine is an engineer at a manufacturing facility. there are both union and non union workers at the plant, so while he (nonunion) is safe, many of his union coworkers are constantly on the chopping block. one of his engineer coworkers is working on the design of a robot that will replace 2-3 union jobs in that plant on day 1. the company would much rather add "robot maintenance" on an engineer's job description, pay them a bonus when they have to go into the plant at 8pm on a Saturday, and be done with it than pay 2-3 people good salaries + benefits and deal with a union, it's simple arithmetic. globalization? another big issue, one that has no doubt helped trump secure the nomination by playing to the threat of globalization. at the same time, you wonder if you can blame a company like IBM for keeping jobs in India when the quality of work is high and the cost is insignificant compared to the US.

what's the solution? not for me to decide, but I think depending on whom you ask, their answers will vary. here's what I know: we will continue to have a low participation rate as long as technology keeps moving forward and there are a lot of old people not working or institutionalized amidst sub-2% GDP growth. I don't know that any policy changes can move the needle in a big way, but I could very well be wrong.

the optimist in me believes that the US is simply in a slow growth period we'll eventually break out of. will it be in 1 year, 5 years, 10 years, or more? no one can know for sure, and I doubt (short of starting a war, a totalitarian or communist regime, or becoming complete isolationists) that any politician can meaningfully alter the progress of a nation. as long as we're capitalist and democratic, we'll have our problems but we'll move forward.

the skeptic in me worries if we'll end up declining as a nation over the next several decades, until behaviors change such that we can flourish again. this would likely mean a declining population, abysmal GDP growth rates, and so on.

for the college kids out there: learn the definitions of economic terms before you start political rants, realize statistics can be manipulative, and question everything. above all else, make yourself irreplaceable and mobile with your career choices.

edit: check out howard marks' new memo, it talks about this very issue https://www.oaktreecapital.com/docs/default-source/memos/economic-reali…

 

I mean, you can explain away low employment participation all you want, but an economy growing at sub-3% for a decade creates less opportunity. The difference in 1% annual growth over the course of a decade would have made the U.S. economy $1.9 trillion larger today (take out the Excel and see for yourself), which is a HUGE amount of economic opportunity that people don't have access to. As a result, those without opportunity substitute work for disability (which has skyrocketed), welfare, food stamps, single-employment household, or a lower level of lifestyle.

My point is, you can cherry pick data points all you want, but the ultimate (and universal) scorekeeper of an economy's health is its GDP growth. Granted, quarters go up and down and sometimes GDP doesn't tell the whole story. But a decade of low growth is not a statistical anomaly. And we've had low growth despite having everything in our favor, including huge amounts of federal deficit spending and countless trillions of dollars in quantitative easing.

Array
 
Virginia Tech 4ever:

I mean, you can explain away low employment participation all you want, but an economy growing at sub-3% for a decade creates less opportunity.

I think it is ridiculous that people still expect an obviously mature economy to grow at 3+% perpetually. I think it is even more ridiculous to constantly quote growth numbers when we are not really in a "growth mode", QE was mostly about avoiding crippling economic depression, you make it seem like it was enacted to spur high GDP growth, that is false and intellectually dishonest. I think thebrofessor brought up many valid points regarding the LFPR and you dismissed both him and Simple As with the "cherrypicking" argument instead of presenting valid counterpoints. I think it is quite sad that a forum of mostly successful, college educated, seemingly intelligent users cannot have a debate regarding the economy without parroting political talking points. I said I wasn't going to post in this thread yet I did anyway. I am probably dumb for doing so.
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I pose another serious question.

As automation/redundancy due to artificial intelligence, scientific advancements, ect, continues to displace workers, what is the way forward? Should we be looking to become more socialist, as some countries have, by implementing things like a basic living wage for all? Or, perhaps, should we go in the other direction, implementing a total free market society, and leaving people to fend for themselves, regardless of what happens to them?

 

I've speculated on this a lot, and I don't know what the way forward is. if you do a completely free market (something I support in principle), you will eventually have so much nonskilled labor that's out of a job, you get to what's happening in spain & portugal with double digit unemployment. you can't have that go on too long without risking a revolution and putting someone like chavez into power.

there are plenty of jobs that don't require skilled labor still, but I wonder how plentiful they will be. I'm betting robot mechanic is going to be a growing field, as will being a guy who simply monitors robots to be sure they're doing their job. but I don't know the numbers there. can 1 guy monitor 100 robots assuming there aren't any errors? also assume those 100 robots took at least 100 jobs, so that's still a lot of people out of work.

part of me says "fuck 'em," let em go back to school, take classes on coursera to get themselves skilled and marketable, but a lot of the population won't take that as an acceptable course of action, and you can be damn sure no politician will run on the platform "well, you lost your job because you're replaceable, I encourage you to make yourself marketable again, but you won't get a welfare check for more than 3 months."

while this next possibility isn't ideal, what I feel will happen as our nation becomes more and more socialist/populist, is there will be government mandates that companies have to hire certain numbers of humans in unskilled jobs, and they'll either accomplish this with the threat of penalties or the benefits of tax credits. not a very efficient system, but it may be what happens.

even though it would fix the problem, you can't reasonably expect a bunch of 50yo guys who spent their whole lives in manufacturing to go back to school and get trained in something like network security. a handful might, but most just want their old jobs back. people hate change, and either we force them to change and then the politicians that do that will lose their jobs, or we let them stay the same and either a) give them jobs which is a suboptimal allocation of resources or b) let them live off of welfare programs funded by the taxpayers.

adam smith is rolling over in his grave.

 
Build the Wall:

Honestly, I think we need to find a way to stop all this innovation. I hope when Trump becomes president he will go after the tech companies much like obama went after the banks We are way beyond the point of inventing things that enhance our way of life. The air conditioner and indoor plumbing has already been invented. Social media is in my opinion much more of negative in our culture than it is a positive. Self driving cars will be an absolute disaster. 1+ mil. people will lose their jobs. Just think of all the idle hands we will have and for what? So a robot can haul goods from coast to coast? We have to wake up as a nation and realize these innovations are net negatives.

You're right. Imagine how many more jobs we would have if people still rode the horse and cart. FUCK INNOVATION!

 

I don't get these positions. So you're saying that population growth hasn't been the biggest leading factor in economic growth? Are you saying that a more complicated society doesn't create more problems that will need to be solved? Are you saying that discovery doesn't happen all the time even if it is a small finding? Do you think that halting all growth, crippling all people, and creating confusion/infighting is the way forward?

 

Who attacked your character? I certainly did not. Why do you think I am a "leftist"? Does that make it convenient for you to engage in an "us vs them" political debate instead of discussing economics? I said perpetual 3+% growth is most likely unsustainable moving forward, ofc some years we will exceed that number, but I would not be surprised if the long-run trend moving forward is 2.5-3% a year. While I acknowledge that you responded to thebrofessor as well as Simple as... that doesn't mean you provided a counterpoint. Stating GDP growth as the main reason for the low LFPR ignores the demographic trends that thebrofessor pointed out. My question to you is: what percentage of the low LFPR do you think is due to GDP growth? The way you've posted you make it seem like it is 100%. Also, you did nothing to acknowledge the fact that you've been purposefully ignoring the reason for QE, which was avoid depression not spur high growth. If, theoretically, since 2008, we were set to decline at 2% for some years and instead expanded at 1.5% (or w.e the number is) then QE was a great policy. I'll stop here.

Array
 
BobTheBaker:

Who attacked your character? I certainly did not. Why do you think I am a "leftist"? Does that make it convenient for you to engage in an "us vs them" political debate instead of discussing economics? I said perpetual 3+% growth is most likely unsustainable moving forward, ofc some years we will exceed that number, but I would not be surprised if the long-run trend moving forward is 2.5-3% a year. While I acknowledge that you responded to thebrofessor as well as Simple as... that doesn't mean you provided a counterpoint. Stating GDP growth as the main reason for the low LFPR ignores the demographic trends that thebrofessor pointed out. My question to you is: what percentage of the low LFPR do you think is due to GDP growth? The way you've posted you make it seem like it is 100%. Also, you did nothing to acknowledge the fact that you've been purposefully ignoring the reason for QE, which was avoid depression not spur high growth. If, theoretically, since 2008, we were set to decline at 2% for some years and instead expanded at 1.5% (or w.e the number is) then QE was a great policy. I'll stop here.

Please include trigger warnings in the future.

 

thebrofessor I agree with a lot of your points here but I do want to add that we have had numerous technological shocks to the economy in the past and the economy has come back stronger every-time. There are jobs you and I cannot possibly anticipate that will be created by the "robots taking over". As a small example, who would've thought random people would be getting steady pay checks by marketing nonsense on instagram just b/c they have followers even seven years ago? That is social media creating a job (one that would not appear on the bls reports coincedentally) that didn't exist and it has nothing to do with technical ability. Maybe I am an optimist but I say the more robots the better, humanity will be better off in the long-run. Of course if the robots start doing some iRobot shit and try to take over then all bets are off.

Array
 

Pulled some old paperwork and files...

In 1996, my residential days, we were writing 30yr fixed home loans at 8%. The economy in general was just fine. Going through a pretty good expansion as a matter of fact. Yet real estate was crap. In fact from 1992-1999 or so it was down. The MF market of all things was performing terribly as well. Income was low and vacancy was high.

I'll have to pull some figures but I don't think rates came down until the .com bomb and or 9-11. Around 9-11 rates were around 7%.

LFPR was higher than today but still sliding. Globalization then is nothing close to what it is now. Baby boomers were at their peak of employment. Ages 40 to 45 or so and it was still sliding.

Hmmm...

 

Come on, guys. There are a lot more important problems than labor force participation to worry about. We have to end apartheid for one. And slow down the nuclear arms race, stop terrorism and world hunger. We have to provide food and shelter for the homeless, and oppose racial discrimination and promote civil rights, while also promoting equal rights for women. We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern and less materialism in young people.

 

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