(Early) Monday DeLong Smackdown: Labor Force Participation Trends

Prime age male for brad pdf

Has the Longer Depression accelerated the trend of “losing” prime-age males, crowding what would have been a generation of the trend into a decade, as I suggested at the FRBB Conference and here in contradiction to what Alan Krueger and Gabriel Chodorow-Reich were saying? No. Or, rather, you could say it looked like that as of 2013 if you thought recovery was then substantially complete. You really cannot say that anymore.

The extremely sharp Gabriel Chodorow-Reich in Email:

Gabriel Chodorow-Reich: Prime age male by 5 year age bin: “Here is a figure and a table related to our back-and-forth…

…The figure shows the LFPR over time for 25-54 year-old men split into 5 year age bins. (The data are the published BLS data with no adjustments for population controls,  I have smoothed and deseasonalized by taking a trailing 12 month moving average.) The dashed lines are the OLS trends estimated using data from 1976-2007.

What I take from the figure is that except for the 25-29 and 30-34 groups, the 1976-2007 trend fits the 2016 value pretty well.  As I said in my discussion, I’m not a huge fan of blindly taking trends and extrapolating.  But for the question of whether 2007-16 is unusual this seems a reasonable approach.  

There is a large deviation from the prior trend for the 25-29 and 30-34 male age groups.  The table, which was in my discussion slides, focuses on this group.  The plurality of the decline in participation is due to increased schooling. This seems benign.  The increase in those reporting disability is less so.  Using 2000 as a benchmark, the transition rates back into employment for this group also seem more elastic to a tighter labor market, which is consistent with other evidence.

Prime age male for brad pdf

Cf.: My earlier post:

Note to Self from Boston Harborside: Alan Krueger and Gabriel Chodorow-Reich both assure me that, to them, it does not look like the decline in prime-age male employment was materially accelerated by what I now call the Longer Depression. I don’t see it here. Are the changes in the age distribution within the category of 25-54 year olds over the past 40 years large enough to make this chart misleading? I cannot see it. I know that one disputes labor numbers with Alan Krueger (or Gabriel Chodorow-Reich) at one’s peril. But it looks to me like we were losing 1.25%/decade as far as prime-age male employment was concerned. And that in the past decade we have lost 3.25%–25 years’ worth of the trend in 10…

Employment Rate Aged 25 54 Males for the United States© FRED St Louis Fed

Must-Read: Steven Greenhouse: A Safety Net for On-Demand Workers?

Must-Read: Steve Greenhouse: A Safety Net for On-Demand Workers?: “For many Americans who care about how workers are treated…

…their biggest concern about the much-ballyhooed ‘on-demand’ economy is the way that Uber, Lyft, and other ‘gig economy’ companies have rushed to treat their workers as independent contractors. For employers, the advantages of this strategy are huge…. You don’t have to follow minimum wage, overtime, or employment discrimination laws, you don’t have to make employer contributions to Social Security, Medicare, or unemployment insurance, and your workers can’t unionize…. Alan Krueger… and Seth Harris… propose that Congress update the nation’s labor laws and create a third category of workers: independent workers… [who] should be covered by employment-discrimination laws, they should have the right to unionize and bargain collectively, and their employers should pay Social Security and Medicare taxes. But Krueger and Harris argue that these ‘gig economy’ workers shouldn’t be covered by minimum wage and overtime laws because, in their view, it’s so hard to keep track of exactly when they’re working….

Their paper left me with numerous questions: Krueger and Harris say that on-demand companies shouldn’t be required to provide workers’ compensation… [but] should be able to opt into workers’ comp as they wish…. Krueger and Harris say that without workers’ comp, workers can always sue under tort law, but that wouldn’t be a satisfactory alternative in many cases…. Krueger and Harris say that on-demand employers shouldn’t have to pay into the unemployment insurance system…. [But] many Uber drivers work 30 or more hours a week, and many have driven for that company for more than a year. So why shouldn’t they be covered by unemployment insurance, just like regular workers?… Krueger and Harris write that Lyft and Uber drivers are a ‘canonical example of independent workers.’ But the California and Oregon labor commissioners and many legal experts say that Uber and Lyft exercise such great control over their drivers that the drivers should be considered employees….

A study that Krueger did, done in conjunction with Uber’s chief of research, found that Uber drivers gross $17.50 an hour on average in 20 cities…. But after subtracting the cost of gasoline, insurance, auto payments, and auto maintenance, many drivers say they net just $10, $11, or $12 an hour. With Los Angeles having approved a $15-an-hour minimum wage and with many Uber drivers netting considerably less than that per hour, why exactly shouldn’t drivers be covered—and protected—by minimum wage laws, especially when Uber’s and Lyft’s apps can easily calculate how much time drivers spend carrying passengers and driving to pick up passengers?…