challenges and opportunities in the labor market and the ...€¦ · moscarini and postel-vinay...

Challenges and Opportunities in the Labor Market and the Role of Data-Driven Policy

Betsey Stevenson Member, Council of Economic Advisers

June 23, 2015

The Labor Market Recovery Accelerated in 2014-2015

1 *Data for 2015 are for January-May only. Source: Bureau of Labor Statistics, Current Employment Statistics.

95

-298

-424

89

173 188 199260 217*

-500

-400

-300

-200

-100

0

100

200

300

400

2007 2008 2009 2010 2011 2012 2013 2014 2015

Average Monthly Job Gain/Loss, ThousandsAverage Monthly Job Growth by Year, 2007–2015

Overview

2

• Five Longer-Term Challenges • Declining labor force participation • Elevated rates of part-time work for economic reasons • Heightened long-term unemployment • Lower labor market fluidity • Stagnating wages

• Relationships Between Labor Market Challenges and the Role of Longitudinal

Data

Overview

3



Data

Labor Force Participation Has Fallen Among Men and Women Since 2000

4 Source: Bureau of Labor Statistics, Current Population Survey.

Men May-15

Women

Overall

30

40

50

60

70

80

90

1950 1960 1970 1980 1990 2000 2010 2020

Labor Force Participation by GenderPercent of Civilian Non-institutional Population Age 16+

Of the Participation Decline Since 2007, More than Half is Due to an Aging Population and One-Sixth is Due to the Business Cycle

5 Note: Year axis denotes first quarter of year noted. See Chapter 3 of the 2015 Economic Report of the President for methodological details. Source: Bureau of Labor Statistics, Current Population Survey; CEA calculations.

62.5

63.0

63.5

64.0

64.5

65.0

65.5

66.0

2009 2010 2011 2012 2013 2014 2015

Labor Force Participation Decomposition, 2009-2015Percent of Civilian Noninstitutional Population Aged 16+

Residual

Aging Trends

Cyclical EffectsActual

There is Less Disagreement in the Literature on the Participation Rate than May be Apparent at First Glance

6

Time Period Shares of the Total Decline

CEA Estimated Shares Over Same Time

Period Trend Cycle Trend Cycle

CEA 2007:Q4 – 2014:Q4 55% 17% Beginning in 2007 CBO (2014) 2007:Q4 – 2013:Q4 50% 33% 48% 25% S. Aaronson et al. (2014) 2007:Q4 – 2014:Q2 82% 11% 51% 21% D. Aaronson et al. (2014) 2007: Q4 – 2014:Q3 74% 13% 54% 19% Erceg and Levin (2013) 2007-2012 17% 55% 55% 42% Fallick and Pingle (2013) 2007:Q4 – 2013:Q2 75% 16% 53% 35% Kudlyak (2013) 2007-2012 80% 20% 55% 42% Shierholz (2012) 2007-2011 31% -- 49% 59% Van Zandweghe (2012) 2007-2011 42% 58% 49% 59% Aaronson et al. (2006) 2007-2013 82% -- 48% 25% Other time periods CEA (2014) 2011:Q1 – 2014:Q4 77% -39% Fujita (2014) 2000:Q1 – 2013:Q4 65% 30% 39% 19% Aaronson, Davis, and Hu (2012) 2000-2011 40% -- 43% 43% Source: Cited studies; CEA calculations.

Comparison of Participation Rate Estimates

Overview

7



Data

Part-Time Work Increases During Recessions Due to Increased Rates of Part-Time Work for Economic Reasons

8

Note: Shading denotes recession. Dashed lines represent pre-Great Recession (December 2001-December 2007) averages. See Chapter 3 of the 2015 Economic Report of the President for details on comparability over time. Source: Bureau of Labor Statistics, Current Population Survey; Polivka and Miller (1998); CEA calculations.

Total Part-TimeMay-15

Part-Time for Non-Economic Reasons

Part-Time for Economic Reasons

0

3

6

9

12

15

18

21

24

1960 1970 1980 1990 2000 2010

Percent of Labor ForceRates of Part-Time Work

Part-Time Work for Economic Reasons is Falling at a Rate Similar to What the 1980s and 2001 Recessions Would Predict

9 Note: The 1980s recessions are consolidated into a single cycle. Source: Bureau of Labor Statistics, Current Population Survey; Polivka and Miller (1998); CEA calculations.

0

1

2

3

4

5

6

7

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Actual

Predicted Based on

1980s Cycles Predicted Based on

Other Post-1957 Cycles

Predicted Based on 2001 Cycle

Share Part-Time for Economic Reasons, Actual and Predicted

2015:Q1

Percent of Labor Force

Overview

10


• Relationships Between Labor Market Challenges and the Role of Longitudinal Data

Long-Term Unemployment Has Accounted for Almost 3/4 of the Decline in the Unemployment Rate Over the Past 12 Months

11 Note: Shading denotes recession. Dashed lines represent pre-Great Recession (December 2001-December 2007) averages. Source: Bureau of Labor Statistics, Current Population Survey; CEA calculations.

Unemployed 26 Weeks or

Fewer

Unemployed 27 Weeks or

More

May-15

0

1

2

3

4

5

6

7

8

9

2000 2002 2004 2006 2008 2010 2012 2014

Unemployment Rate by DurationPercent of Labor Force

Long-Term Unemployment Has Accounted For an Increasingly Large Share of the Increase in Total Unemployment Over the Past Half Century

12 Note: Time trend projection is based on data from 1948 through 2007. Source: Bureau of Labor Statistics, Current Population Survey; CEA calculations.

Actual May-15

Linear Time Trend

0

5

10

15

20

25

30

35

40

45

50

1960 1970 1980 1990 2000 2010

Long-term Unemployed as Share of Total UnemployedPercent

Multiple Measures Show Labor Market Fluidity Has Increased Since the Great Recession…

13

JOLTS HiresJOLTS

Separations

J2J HiresJ2J

Separations

J2J Job-to-Job Hires

0

2

4

6

8

10

12

14

16

2000 2003 2006 2009 2012

Hires, Separations, and Job-to-Job Flow Rates, 2000–2013Percent of Employment

Note: J2J job-to-job hires are generally equal to J2J job-to-job separations (not shown). Shading denotes recession. Source: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey; Census Bureau, Job-to-Job Flows.

…But Fluidity Has Been Declining for Decades

14 Source: Hyatt and Spletzer (2013); Bureau of Labor Statistics, Current Population Survey; Bureau of Labor Statistics, Job Openings and Labor Turnover Survey; Census Bureau, Longitudinal Employer-Household Dynamics.

CPS Hires

JOLTS Hires

JOLTS Separations

0

5

10

15

20

25

30

35

1995 1999 2003 2007 2011

Trends in Hires and Separations, 1995-2012

2012:Q3

Percent of Total Employment

LEHD Hires

Workers are Less Likely to Change Employers, Occupations, and Industries

15 Source: Molloy, Smith, and Wozniak (2014)

Occupation Change

Industry Change

Employer Change

2013

0

2

4

6

8

10

12

14

1980 1985 1990 1995 2000 2005 2010 2015

Percent of Total Population Age 16+Employer, Occupation, and Industry Transitions

Firm and Establishment Entry Rates Have Also Declined

16 Source: Census Bureau, Business Dynamics Statistics; CEA calculations.

Firms

Establishments

2012

7

8

9

10

11

12

13

14

15

1975 1982 1989 1996 2003 2010

Firm and Establishment Entry Rates, 1978–2012Percent of Total Firms/Establishments

Overview

17



Data

The Productivity-Wage Gap Appears Large

18 Source: Bureau of Labor Statistics, Current Population Survey; Bureau of Labor Statistics, Productivity and Costs; Bureau of Labor Statistics, Consumer Price Index; Bureau of Economic Analysis, National Income and Product Accounts; CEA calculations.

Productivity -Measured by

BLS

Median Hourly Wages

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

1979 1989 1999 2009 2019

Cumulative Growth in Productivity and Wages, 1979-2014Index (1979=1)

The Productivity-Wage Gap Has Multiple Components, the Largest of Which is a Difference in Deflators

19

Productivity -Measured by

BLS

Productivity Deflated by

CPIMean Hourly

Compensation

Mean Hourly Wages

Median Hourly Wages

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

1979 1989 1999 2009 2019

Cumulative Growth in Productivity and Wages, 1979-2014Index (1979=1)

(1)

(2)

(3)

(4)

Source: Bureau of Labor Statistics, Current Population Survey; Bureau of Labor Statistics, Productivity and Costs; Bureau of Labor Statistics, Consumer Price Index; Bureau of Economic Analysis, National Income and Product Accounts; CEA calculations.

Inequality Has Increased as Wages Have Stagnated for Most Workers, But Risen For the Highest-Earners

20

90th Percentile 2014

50th Percentile

10th Percentile

60

80

100

120

140

1979 1984 1989 1994 1999 2004 2009 2014

Wage InequalityReal Hourly Wage Index, 1979=100

Note: The figure depicts real hourly wage quantiles for workers age 18 to 64, excluding individuals who are self-employed, who have real wages below $0.50 or greater than $100 (in 1989 dollars), or whose wages are imputed. Top-coded earnings adjusted following Lemieux (2006). Inflation adjusted using the CPI-U-RS. Source: Bureau of Labor Statistics, Current Population Survey (Merged Outgoing Rotation Groups); CEA calculations.

Overview

21



Data

Four New Working Papers Suggest Firm-Side Behavior May be Linked to Fluidity, Wage Growth, and Inequality

22

Moscarini and Postel-Vinay (2015) • Use data from JOLTS • Suggestive evidence of “job ladder” from smaller to larger firms that collapsed during the Great

Recession

Haltiwanger, Hyatt, and McEntarfer (2015) • Use matched employer-employee LEHD data • No evidence of “job ladder” from smaller to larger firms, but evidence of worker reallocation from

lower-paying to higher-paying firms

Kahn and McEntarfer (2014) • Use matched employer-employee LEHD data • Separations – especially those most likely to be voluntary – tend to drop more sharply among

lower-paying firms during recessions

Song et al. (2015) • Use data sampled from the Social Security Administration Master Earnings File • Nearly all of the rise in earnings inequality between 1982 and 2012 was due to increases in

between-firm earnings inequality

Challenges and Opportunities in the Labor Market and the Role of Data-Driven Policy

Betsey Stevenson Member, Council of Economic Advisers

June 23, 2015

challenges and opportunities in the labor market and the ...€¦ · moscarini and postel-vinay...

Documents