Since it is forced discipline and regimen month, I am up. And one of the annoying nagging things in the back of my head was this score of posts and economic ideas I've had that I just plan didn't have the waking hours to attend to previously. But now since "we work until there is no more work to be done or we fall asleep trying" I'm knocking this one off the "to do list."
Follow me in on this because it takes a little bit of explaining.
All standards of living comes from economic growth. And in the ideal world the economy would be growing faster than the population. This excess growth would result in higher GDP's per capita or higher "wealth." However, it is not the entire population that produces the economy growth. You have children and retirees and, don't forget people who just don't want to work god bless 'em! So you look at the "labor force" which are those "willing and able" to work whether employed or not.
However, I was a bit cynical. I believe if it weren't for women entering the labor force, there would be fewer and fewer abled bodied people working as a percent of the total (which is true). Also, women are also leaving the labor force, resulting in a very quick drop in the labor force participation rate since this Great Recession began. So to simplify things (as well as account for laziness) I dispensed with the concept of "labor force participation" and just looked at "working age population" i.e.-the people who should be working in relation to the amount of economic growth.
In short, I wanted to see if the economy was growing at a rate faster than the employable population and if so;
GOOD! Because that means higher wages and higher standards of living
and if not
BAD!!! Because that means stagnating or decreasing standards of living and wages.
Thus the "GDP Minus Working Age Population Growth Rate Premium."
In short I took the annual growth rate of the economy and subtracted out from that the growth rate in the working age population. But because economic growth is chaotic, I did my patented, "Let's smooth things out over a rolling 10 year average." The results were thus:
It's pretty much what I expected. From the 50's to the 60's (when America was evil and bad) the economy grew 3 full percentage points faster than the working age population. This then tanked with the oil embargoes and ensuing Volker Recession, but recovered to a full 2 percentage point premium for the next 27 or so years, before it tanked during the Great Recession.
There really isn't much to say that we don't already know intuitively. The economy is not growing enough to provide enough jobs for everybody, let alone increase the country's standards of living. And it won't be until the private sector (where all jobs, production and wealth comes from) is reinvigorated will we recoup (though the data only goes up to 2012, I would love to see 2013 and 2014 with Obamacare in place).
The real debate is whether this makes people on the left happy that they've knocked the world's former greatest down to its knees or whether they're so ignorant about economics that they would never see, let alone understand the above chart.