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Metrics of Employment (updated)

I just read an article at autoDogmatic that I don't quite get. I wrote out what I thought was a very nice reply, but when I previewed the comment I got an error. The site is giving me a hard time about the links I tried to include. I figure it's easier to post my thoughts here, where I at least know how to make links happen.

Aaron, either I am missing your overall point, or you’ve gotten yourself sidetracked. Why do we keep and report an unemployment rate? It is not a figure for its own sake. There is a good reason the figure does not count prisoners – or the retired, or children, or stay-at-home spouses/parents, or the disabled.

The Bureau of Labor Statistics does keep track of the "Labor Participation Rate", which is more what you are really talking about. This past July, the Washington Post ran an article on the Labor Participation Rate, and it included this excellent graphic. Even though the graph starts with 1948, the article notes that the male labor force participation rate reached an all-time peak in 1949 (at more than 87 percent). But the rise in female participation has been greater than the decrease in male participation – we are at historic levels of absolute employment in this country, and it’s been pretty steady and predictable. The article even addresses reasons why the male rate has dropped, like greater numbers of men staying out of the workforce for education reasons – consider the fact that the leftmost column of this BLS chart is the only one to have a significant drop over the last quarter century.

Now, the Post article doesn’t address the fact that there are more men in prison today than ever before, but the BLS covers only the “noninstitutional population” aged 16 and over. But my point is that I don’t understand why you would want to count them. I agree completely that the US prison rate is an outrage – especially the nonviolent drug offenders. But what useful information do we get by counting them as “unemployed” or “underemployed” or having the BLS include them in the Labor Participation Rate?

Scott Lamb seems to be on the same track I am.

I think I might also have some issues when Aaron says the half with the "short end" of the stick doesn't have such bright employment prospects. The average time of unemployment is down, wages are up, non-wage compensation is up, and education is “free”. Why does the half with the “short end” of the stick lack?

Update at 10:43 ET, the links are now fixed and no longer go to Microsoft.com. Thank you Neal for pointing that out.