Real Culprit Behind Smaller Workforce: Age
From The Wall Street Journal:
Americans are leaving the labor force in unprecedented numbers. But the trend has more to do with retiring baby boomers than frustrated job seekers abandoning their searches.
The share of the population either working or looking for work in March hit its lowest level since 1979. The measure, known as the participation rate, now stands at 63.6%, down from 66% when the recession began. That represents close to seven million workers who are now "missing" from the labor force.
The April jobs report, coming Friday, probably won't repeat March's historic decline, when the labor force shrank by nearly half a million workers. But it likely won't show much improvement, either. The participation rate has trended downward through both the recession and the recovery, continuing to fall even as other measures of economic well-being have improved.
The falling participation rate raises two main fears among economists. First, it could suggest that the labor market is even weaker than it appears. The unemployment rate, for example, fell to 7.6% in March, its lowest level since late 2008. But that figure only includes people who are actively looking for work. Add back the missing millions and the unemployment rate would be 11.4%.
The second fear is that if unemployed workers are giving up on finding jobs, they could drift so far from the labor market that they will be unlikely to return even when hiring picks up. They will go on disability insurance—8.9 million Americans were receiving federal disability payments in March, up from 7.1 million when the recession began—or other government benefits, retire earlier than planned, or work for cash in the gray economy. That could create deeper structural problems that could persist long after the rest of the economy heals.
A close look at the numbers suggests both fears, though real, may be exaggerated.
Americans are leaving the labor force in unprecedented numbers. But the trend has more to do with retiring baby boomers than frustrated job seekers abandoning their searches.
The share of the population either working or looking for work in March hit its lowest level since 1979. The measure, known as the participation rate, now stands at 63.6%, down from 66% when the recession began. That represents close to seven million workers who are now "missing" from the labor force.
The April jobs report, coming Friday, probably won't repeat March's historic decline, when the labor force shrank by nearly half a million workers. But it likely won't show much improvement, either. The participation rate has trended downward through both the recession and the recovery, continuing to fall even as other measures of economic well-being have improved.
The falling participation rate raises two main fears among economists. First, it could suggest that the labor market is even weaker than it appears. The unemployment rate, for example, fell to 7.6% in March, its lowest level since late 2008. But that figure only includes people who are actively looking for work. Add back the missing millions and the unemployment rate would be 11.4%.
The second fear is that if unemployed workers are giving up on finding jobs, they could drift so far from the labor market that they will be unlikely to return even when hiring picks up. They will go on disability insurance—8.9 million Americans were receiving federal disability payments in March, up from 7.1 million when the recession began—or other government benefits, retire earlier than planned, or work for cash in the gray economy. That could create deeper structural problems that could persist long after the rest of the economy heals.
A close look at the numbers suggests both fears, though real, may be exaggerated.
posted by Sid Cottingham | 4:00 AM
1 Comments:
Interesting to think that age might be a major factor. Think our data needs to better reflect reality including age, ability, etc. This article takes a look. http://www.statisticsblog.com/2013/03/minding-the-reality-gap/
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