Who’s not participating in the labor force?

Date posted: October 17, 2013

The percentage of adults in the labor force defined by those working or looking for work has steadily declined in the last decade, but particularly since 2008. Do we know where this is occurring? N.C. State University economist Mike Walden responds.

“Well, we’ve seen a drop of about four percentage points recently from about 67 percent of folks in the labor force down to 63 percent. Now, about half of that economists determined is due to retirements, particularly the baby boomers retiring. So when they retire, baby boomers aren’t working. They’re not looking for work. So they’re not classified as in the labor force.

“Now, for prime age workers, those between ages 25 and 54, we have seen a decline. We have seen a decline from about 84 percent to 80 percent over the last eight years or so. The biggest drop in labor force participation, however, has been for younger workers — people between 16 and 24.

“Labor force participation for those folks has gone from 65 percent down to 55 percent since 2000, and the drops have been even bigger if you go back to 1980 — from 70 percent down to 55 percent.

“Now, part of that is due to young people staying in school longer. More of them are going to college, and more of them are getting advanced degrees. But unfortunately, another big part is our change is the economy. There aren’t as many job opportunities for young people, particularly young people who don’t get advanced training.”

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