Employment

Employment-1939-2015Jan

This chart is from www.UnemploymentData.com . I have made a few annotations or additions, the principal one being the green line from the lower left to the upper right. It is a straight line so the number of people working is a linear function of time and demographics. Using 1945 as the starting point, this function can be described as X=40+1.618(Y-1945) – the Fibo. number is pure coincidence!-.

    Fill in the numbers and you get a value of 140.3 mln for 2007, and 151.6 mln for 2014 a difference of about 11.3mln or about 7.5% (on 151.6mln). As there are now 7.5% more people available for work than in 2007,and the number of employed has stayed the same, the un rate must now be equal to what it was then – 4.4% – plus the 7.5% which equals 11.9% , represented by the red triangle, quite a bit more than the “official” rate of 5.6% or so.

    The participation rate is not a variable in the above function. For the most part it should be fairly constant in any event and certainly should not have abrupt changes simple because Lehman went bust. The roughly 12% rate is in line with other non-official estimate such as those of ShadowStats. The bad part of all this is that you cannot trust government, the good part is that QE could go on for a lot longer unless some black swan comes down the river.