How Do We Compare Unemployment Across Decades If More People in a Household Are Working Now?

BY busadmin  September 4, 2009 at 10:30 AM EST

job fair; via Getty Images

Question: Economic reports routinely compare current unemployment statistics against historical unemployment statistics. However, I haven’t seen any discussion of the significant increase in the number of household members who are employed or looking for employment and its impact on such a comparison.

My point is, with the number of household members who are employed increasing, such comparisons may tend to overstate the economic downturn or, at least, overstate it in terms of comparison with prior economic downturns.

Paul Solman: The big increase in the official workforce over the years has, of course, been women. They have a lower unemployment rate than men. So why would it be that their inclusion would overstate unemployment? Might be just the opposite, no?

Say an island has 20 men and women. Its workforce is 10 men while the women “stay home” and care for the kids. Seven men are employed; three, not. Unemployment rate: 30 percent.

Now five of the women join the workforce because there’s a boom and they get paying jobs. Unemployment goes down to 20 percent (3 out of 15).

But then comes the bust. Only if women get laid off at a higher rate than men will unemployment rise faster than it otherwise would.

Now in fact, the “workforce participation rate” — the proportion of Americans 16 or older working at least part-time — has been going DOWN this decade. It was 58.6 percent in 1948, the earliest date for which I can find a number. It didn’t hit 60 percent until 1969. It peaked at 67.3 percent in the year 2000, just as the stock market ‘tech bubble’ was at the bursting point. Right now, it’s down to 65.5 percent.

This is why you’ve been hearing, for decades, that FAMILY income is up, while earnings for most Americans are flat or down: There’s been a second earner in more and more homes over the decades, compensating for the downward trend in median incomes.
But in the aughts, the trend has reversed. A SMALLER percentage of grown-up Americans is working than was a decade ago.