No, Obama's Not to Blame for Our Historically Pathetic Participation Rate
Father Time and colleges are
In December, the U.S. participation rate—that's the share of the working-age population that's working or looking to work—dropped to its lowest percentage in four decades. In Washington, bad news means somebody must be blamed, so some Republicans (e.g.:
Rep. Lynn Jenkins and
Rep. Marsha Blackburn) have decided that someone is President Obama.
Unlike the country's high unemployment and slow job-creation, our low participation rate (the lowest since 1978, to be exact) is sometimes considered something of a mystery. But upon examination, it's really not that mysterious. The recession has
discouraged many people from looking for a job and encouraged marginal workers to find other things to do with their time, like care for their kids. But most of the decline appears to be the predictable result of an aging country that is waiting longer to enter the workforce because we're spending more time in school. And, since one of those things (aging) is inevitable and the other (school) is arguably good, it's hard to see how the low participation rate is the president's fault.
In a way,
this graph below—which, at first glance, seems innocuous and even a little boring—offers a perfect solution to the participation puzzle. It shows that young people are working less (because they're in school) and it shows that old people are working more than they used to, but still much less than other workers (because they're retired).
more
Interesting chart that shows that the demographics that should be working will show a decline and has shown a decline. Only ones on the increase are those over 55. So the left will defend Obama by saying the retirees are the problem when in fact their participation rate, those of retirement age, will increase.
Reading without reflecting is like eating without digesting.
Edmund Burke
The place where we're really missing workers is in the 16-24 cohort, where there's a 4.3-million-person hole.
What accounts for it? School, mostly.
After demographics, the decline in participation among young people is, by far, the leading factor in the overall decline in participation. If we raised our participation rate to 1992 levels today, the labor force would grow immediately by 6.7 million people—and, as you see, 4.3 million of those workers would be under 24. The "missing workers" in the economy are mostly young.
And they're mostly in high school or college. Education enrollment jumped four percentage points in the four years after the recession started, "essentially accounting for nearly all of the decline in the youth [participation]," according to a
2013 paper by Christopher J. Erceg and Andrew T. Levin. Higher college enrollment also accounted for about one-third of the decline among prime-age workers (25-54), too. As you can see, high-school and college completion are soaring, and people in school are considerably less likely work.
The recession, too, has affected the participation rate through various channels. There are about a million discouraged workers who have dropped out of the labor force; Social Security Disability payments are up for the 55+ cohort, which typically takes those workers out of the job hunt; and a weak labor market can nudge young people back to school. But the decline in participation is mostly a combination of demographics and scholastics. We're entering the workforce later, staying longer, and getting older. The president can beg Congress to spend/cut/deregulate or whatever your particular policy-verb-of-choice may be, but it's fairly clear that we're up against mighty forces—age and education trends—that will resist quick fixes.
