For this
visualization project, I am using iCharts
to help illustrate the changes in the labor participation rate and unemployment
rate of the United States over the years 1948 to 2013. Historically, the unemployment rate has been used as a measure of the economic
strength of our nation. The
unemployment rate is calculated as a percentage by dividing
the number of unemployed individuals by all individuals currently in the
labor force. According to Wikipedia,
the
labor force participation rate is the percentage of the population that are 16 years of age and older residing in the 50 States and the District of
Columbia who are not inmates of institutions (penal, mental facilities, homes for the aged), and who
are not on active duty in the Armed Forces that are employed or are unemployed and
actively seeking a job.
From the above unemployment rate graph, the rate has been steadily decreasing since 2009, indicating an improving economy. According to the Bureau of Labor Statistics (BLS), persons not in the labor force who want and are available for a job and who have looked for work sometime in the past 12 months (or since the end of their last job if they held one within the past 12 months), but who are not currently looking because they believe there are no jobs available or there are none for which they would qualify are called “discouraged workers”. Furthermore, the BLS states that the unemployment rate does not include these discouraged workers that have not been actively looking for work in the past four weeks, while the labor force participation rate does.
Since the beginning of the economic crisis in 2008, the labor force participation rate is showing a decline of the percentage of participating adults in the labor force. As a result of that decline, there are a greater number of discouraged workers that are increasingly likely to be dependent on government support. With greater dependence on government support and fewer productive workers in the market place, a theoretical decline in economic output would follow. Therefore, these graphs conclude that the labor force participation rate can, in many ways, serve as a more accurate metric of economic health.
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