- Nov 26, 2011
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A lot of hay is being made out of the declining labor force participation rate by those who want to distract from the very positive job creation numbers lately. Therefore, it is a good idea to understand what the LFPR is and what it is not. It is also a good idea to understand the actual underlying causes instead of manufacturing a lot of wishful thinking over the matter.
First, the LFPR is defined as "a measure of the active portion of an economy's labor force."
There are some who believe the retiring of baby boomers has a lot to do with the declining LFPR. But when we break the rate down by age, that myth is exploded.
Take a look at this study by the Americans for Limited Government.
You will find the participation rate of the over-65 age group has gone up since 2003.
You will find this confirmed in EBRI's study of the same group:
So what is actually causing the LFPR to drop?
The cause is that younger people are not going to work at the rate they used to.
Now...this is going to cause some people to believe that older workers working longer are preventing younger workers from getting jobs. I hear that argument a lot whenever I say we need to raise the Social Security and Medicare eligibility ages.
But that myth has also been exploded: Are Aging Baby Boomers Squeezing Young Workers Out of Jobs?
Raise the retirement age. We are living much longer than our ancestors who set the age at 65, we should be working longer.
If you read the EBRI report I linked above, you find that the better educated the worker, the higher their participation rate. Older, better educated workers are participating in the workforce longer because they actually like to work.
The problem is education. Higher education is getting farther and farther out of reach of succeeding generations. Skyrocketing tuition, lower scholastic achievement in the primary and secondary grades. These are the root causes of the dropping LFPR.
And now let us explode another myth. The myth the declining LFPR is due mostly to "discouraged workers" who have given up looking for jobs:
It is not due to discouraged people, it is due to young people not entering the work force to begin with.
Let's explode one final myth. The myth this is somehow the current President's fault. Those who would like you to believe this are very careful of how they frame the shot. But when you pull back, you get this:
The rate has been steadily dropping since 1997.
You can also verify these facts here: Civilian labor force participation rates by age, sex, race, and ethnicity
Look how precipitously the 16-24 labor force participation rate has dropped. From 66.1 percent to 49.6 percent. Look how the over 55 rate has been going up.
First, the LFPR is defined as "a measure of the active portion of an economy's labor force."
There are some who believe the retiring of baby boomers has a lot to do with the declining LFPR. But when we break the rate down by age, that myth is exploded.
Take a look at this study by the Americans for Limited Government.
You will find the participation rate of the over-65 age group has gone up since 2003.
You will find this confirmed in EBRI's study of the same group:
So what is actually causing the LFPR to drop?
The cause is that younger people are not going to work at the rate they used to.
Now...this is going to cause some people to believe that older workers working longer are preventing younger workers from getting jobs. I hear that argument a lot whenever I say we need to raise the Social Security and Medicare eligibility ages.
But that myth has also been exploded: Are Aging Baby Boomers Squeezing Young Workers Out of Jobs?
Raise the retirement age. We are living much longer than our ancestors who set the age at 65, we should be working longer.
If you read the EBRI report I linked above, you find that the better educated the worker, the higher their participation rate. Older, better educated workers are participating in the workforce longer because they actually like to work.
The problem is education. Higher education is getting farther and farther out of reach of succeeding generations. Skyrocketing tuition, lower scholastic achievement in the primary and secondary grades. These are the root causes of the dropping LFPR.
And now let us explode another myth. The myth the declining LFPR is due mostly to "discouraged workers" who have given up looking for jobs:
It is not due to discouraged people, it is due to young people not entering the work force to begin with.
Let's explode one final myth. The myth this is somehow the current President's fault. Those who would like you to believe this are very careful of how they frame the shot. But when you pull back, you get this:
The rate has been steadily dropping since 1997.
You can also verify these facts here: Civilian labor force participation rates by age, sex, race, and ethnicity
Look how precipitously the 16-24 labor force participation rate has dropped. From 66.1 percent to 49.6 percent. Look how the over 55 rate has been going up.
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