Economy & Business

The Facts on Employment

Job seekers at the TechFair in Los Angeles, Calif., March 8, 2018. (Monica Almeida/Reuters)
Data show that people are starting to come back to work.

Recently, the Washington Post’s “Fact Checker,” Meg Kelly, awarded Ivanka Trump two Pinocchios for saying that people were returning to the work force. The Wall Street Journal’s James Freeman took on the Post’s fact checker for pointing out that what was really being checked were opinions, not facts, and the only fact they commented on, they acknowledged to be true.

But it is possible to be even more definitive. The Bureau of Labor Statistics (BLS) reports employment rates for different demographic cohorts. The data prove that Trump is correct.

Consider first her statement. “I think one of the tremendous opportunities that we’re seeing, because the economy is so strong, is that people who have been out of the work force are coming back off the sidelines. And this is something we are working incredibly hard to incentivize, because there is a large population of prime-age men and women who are out of the work force and who are now, slowly, starting to return.” Now consider this table:

Note that employment rates are up for each of the age cohorts that Trump talked about — “prime age” being traditionally defined as 25–54. In addition, they have risen for each of the major ethnic groups broken down by sex.

Although the unemployment rate declined between 2008 and 2016, had the labor-force-participation rate in 2016 been at its 2008 level, the unemployment rate would have been far higher. People simply dropped out of the labor force. The unemployment rate is measured as a share of people in the labor force, so when unemployed people drop out of the labor force, the unemployment rate drops — but the employment-to-population ratio does not.

Since then, unemployed people have reentered the labor force — driving labor-force participation up in virtually all groups. The difference is that many of those people have found jobs. The unemployment rate rose in June only because more people rejoined the labor force. (The only exception is white males, where the employment rate held steady.)

Ivanka Trump discussed the challenge of incentivizing people to return to work. Not only have there been policy changes since 2016 (though these are usually portrayed in an unfavorable light), but survey evidence also suggests that people’s overall attitudes toward work are changing. So it is certainly fair for her to note both policy changes and a change in the attractiveness of work since President Trump took office.

When all demographic groups show identical trends and there is an across-the-board reversal in the data, the statistical case that something significant has happened is overwhelming. People’s attitudes toward work have changed for the better. Not only is work getting easier to find, but there may even be a choice of jobs available.

It is also noteworthy that the biggest drop in participation between 2008 and 2016 and the biggest rises since were for blacks and Hispanics.  This certainly does not match the conventional (or the Washington Post’s) “wisdom” on who is benefiting most from the return-to-work trend.

It may be that the Washington Post has a source other than the Bureau of Labor Statistics for its data on employment. They did not cite a source for their assertion that Ivanka Trump deserved two Pinocchios. But BLS is the authoritative source for labor-market data. More likely the Post merely asserted that she was wrong, confident that no one would fact-check their fact-checking. The Post may owe Trump an apology, but it also owes its readers the truth.

Lawrence B. Lindsey is president of The Lindsey Group. He was director of the National Economic Council during the Bush administration, and served as a governor of the Federal Reserve System from 1991 to 1997.

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