The disappearing work force
Last month’s job report contained the good news that more people are working, but it also had the bad news of the nation’s lowest labor force participation rate in 30 years. Is this a problem and if so, why? N.C. State University economist Mike Walden answers.
“Well first, let’s define what labor force participation is. It simply means people wanting to work. So, it’s going to include either people who are working, have a job and are working, or people who are unemployed, implying that they are looking for a job.
“The percentage of our population that is now in the labor force that is either working or wanting to work is at a 30-year low. Now typically, we see this labor force participation rate go down during recessions, but then in economic recoveries, which we are in now, it tends to rebound.
“We have not seen that rebound yet in this economic recovery. So, this is leading some economists to ask why.
“Some of this has to do with our aging population. And obviously people over age 65 are a growing part of our population. Many of those folks choose to retire. Therefore, they’re not going to be in the labor force. So, that could explain part of it, but statistical research shows an aging population can’t explain all of it.
“We worry about what we call discouraged workers. These are people who want to work, but they’ve given up looking for work. We also have more folks who have received disability. We also worry about folks who are not looking for work or are unemployed, not having the right skills for our changing workforce. So, I think this is an issue that will receive more attention in the future.”Category: Economic Perspective