Friday, October 2, 2009

The Great Reversal

It's been a while since I've had the time to add to the blog. Thanks to everyone for their patience and hopefully it was worth the wait.

Sometimes changes occur occur quickly and other times they seem to happen in geologic time. The later are usually referred to as secular changes and the former as cyclical, at varying degrees of trend. The distinction is somewhat arbitrary and depends on the perspective of the observer. Being admittedly human ourselves, we will generally refer to a trend playing out over a generation or longer as secular but many brilliant minds will refer to even longer-term trends as cyclical - such as the Kondratieff Wave Cycle. With that definition in mind let's move on to the subject of today's blog entry.

The Big Shift

Over the last two generations we have seen an enormous shift in social attitudes and structure, with women and especially married women entering the job market. This shows up in many ways in the labor statistics but the most stable measurement and the one least subject to manipulation is the employment to population ratio, which measures those working to the total non-institutional adult population. Forty years ago in late 1969 58.1% of all adults in the US were employed. For over a generation, more working women swelled that number - which reached a peak of 65.7% in April 2000, the very peak month of the tech bubble. Last month, September 2009 saw the employment to population ratio fall back to 58.8%. This essentially means that the busts which followed the serial bubbles have wiped out the effects a multi-decade secular social trend.

This does not at all imply that women have withdrawn from the workforce en masse. It simply demonstrates the power of the economic decline which we are currently experiencing and suggests that the decline is simply a continuation of the one which began in 2000 and was interrupted by the final desperate act of housing bubble. Facts give the lie to our government's attempt to put a happy face on the situation. To illustrate the size of the reversal, let's look at a 60-year chart of the employment-population ratio:

Does that clear things up a bit?