* Editor's Note: The first 3 articles below discusses the unemployment rate and our lack of job creation, because it's related to the declining labor force. And the 4th article refers to the participation rate, which is followed up by some quotes I extracted from a new Fed study (along with my notes) on the Labor Force Participation Rate (LFPR).
(September 5, 2014) @FiveThirtyEight (by Ben Casselman) Don’t Blame Boomers For Unemployed Workers Leaving The Labor Force
* Editors Note: I have posts with similar complaints: White House: "Boomers Reason for Declining Work Force" and Fed Up with the Fed Blaming Boomers and Falsely Blaming Baby Boomers for Smaller Labor Force.
(September 5, 2014) @TruthOut (by Dean Baker) Employment growth continues to be less skewed toward older workers. Workers over age 55 accounted for 108.2 percent of total employment growth in the first four years of the recovery. By contrast, they accounted for just 29.4 percent of employment growth over the last year.
(September 5, 2014) @Associated Press (by Christopher S. Rugaber) The unemployment rate fell to 6.1 percent from 6.2 percent. But that was because more people without jobs stopped looking for one and were no longer counted as unemployed.
(September 5, 2014) @ZeroHedge (by Tyler Durden) Labor Participation Rate Drops To Lowest Since 1978; People Not In Labor Force Rise To Record 92.3 Million
* Editor's Note: ZeroHedge refers to a new Fed study about the Labor Force Participation Rate (LFPR). I excerpted a few paragraphs from their report below. I'll preface it with this: The Fed study seems to "hem-and-haw" a lot, with what appears to be a lot of guess work, assumptions, conjecture and surmising. In a nutshell, it emphasizes that half the decline in the LFPR since the onset of the recession in 2007 was due to retirees and those on disability; and that we should expect a further decline in the LFPR going forward — largely because of an aging work force (and not for a lack of jobs) — essentially implying that the decline in the labor force is mostly because of "structural" and not "cyclical" factors (In other words, to put it bluntly, the Fed report is mostly B.S.)
New Economic Propaganda from the Federal Reserve Board
(September 4, 2014) @Federal Reserve Board Labor Force Participation: Recent Developments and Future Prospects (Actual 90-page study here —> PDF)
PAGE 24 - "There has been an ongoing upward trend in participation rates for individuals 55 years and older."
PAGE 32 - "The leading-edge of the baby-boom generation reached age 62 (the minimum age to receive Social Security retirement benefits) in 2008, concomitantly with the onset of the recession. Thus, we would have expected an upswing in retirements to begin even absent the recession, which complicates the attempt to distinguish structural and cyclical factors ... On the one hand, staggering job losses during the recession and a subsequent lack of employment opportunities undoubtedly led some individuals to enter retirement sooner than planned. On the other hand, the financial crisis, with its associated losses in housing and stock market wealth, wreaked havoc on household balance sheets, likely causing some individuals to delay their retirement."
PAGE 33 - "Within-age retirement rates actually started declining around the late 1990s, likely due to a combination of institutional changes in social security and pension plans, increasing levels of education among older individuals, and longer lifespans. There is no obvious impact of the Great Recession and its aftermath on within-group retirement rates, and thus no clear evidence in favor of a dominant effect from either increased early retirements due to discouragement or deferred retirements due to lower-than-expected asset accumulation."
Editor's Note: Regarding "longer lifespans" --- @The Atlantic: Get Rich, Live Longer @ Forbes (2002) Why the Rich Live Longer; @ Forbes (2004) Why the Rich Live Longer; @ Forbes (2006) Why the Rich Live Longer
PAGE 34 - "Social Security retirements started to turn up during the recession. One possible interpretation of these patterns is that some individuals who lost their jobs began to collect Social Security retirement benefits during the recession (perhaps before their full retirement age) but nevertheless remained in the labor force to search for a new job."
PAGE 35 - "The increase in retirements and disability can account for a large portion of the rise since the recession in the share of individuals who are out of the labor market and don’t want a job. However, the available evidence suggests that these increases are primarily continuations of longer-term trends and so have largely been driven by structural influences."
Editor's Note: Regarding disability, the Fed can use the argument that "applications" have risen, in part, to explain a declining labor force — but despite what some political pundits have been claiming, actual "awards" have declined — and make up a very tiny increase of the decline in the labor force participation rate. See my posts: Report: Disability Claims and Awards Declined and 8.9 Million on Disability vs. 92.5 Million not in Labor Force. And yes, retirements contribute (about 1 million a year since 2008), (See my post: Record Number of Boomers Left the Labor Force). But high schools graduates far out-number them (over 3 million a year). See my post: Since Recession Ended, 11 Million more not in Work Force.
PAGE 45 - "Rates for prime-aged men have continued their long and gradual downward trend, joined relatively recently by prime-aged women, whose marked increase in participation ended around 1990. In contrast, participation rates for older persons have been rising since the mid-1990s."
PAGE 63/64 - "Increasing longevity and better health status, coupled with changes in social security rules and increased educational attainment, have contributed to an ongoing rise in the participation rates of older individuals, but these increases have not been large enough to provide much offset to the various downward influences on the aggregate participation rate."
Editor's Note: In conclusion, while Baby Boomers and older workers have contributed to the decline in the labor force, it has been MOSTLY laid-off prime-age workers and younger people who have first attempted to enter the labor force after graduating from school that make up the bulk of discouraged workers and the largest part of the decline in the labor force — not the small ratio of disabled older workers, or older laid-off workers, or older workers retiring. The reason: not enough jobs. Period. And with more offshoring of jobs, computers, automation and robotics, expect a further decline of the labor force (See my post: When Human Labor becomes Obsolete).
My Related Posts:
- Economic Propaganda and Wonkish Babble — Secular Stagnation?
- Retirees and the Declining Labor Force
- 2014 CBO Report on Labor Force—Debunked
- The Labor Force is Shrinking for Lack of Jobs
- BLS: Labor Force Projections to 2022
- CBO Wrong on Labor Force Participation Rate (LFPR)
- Labor Force Participation Rate - LFPR - Bud Meyers
UPDATE November 2014..............
ReplyDeleteZerohedge:
"Contrary to the pervasive and erroneous propaganda, the collapse in the labor force has little to do with the alleged millions of retiring baby boomers (quite the contrary: as a result of ZIRP crushing their lifetime savings, baby boomers have been forced to remain in the workforce in ever greater numbers) and everything to do with the lack of employment opportunities, or perhaps an unwillingness to work, for young Americans."
http://www.zerohedge.com/news/2014-11-15/real-reason-americas-collapsing-labor-force
(Zerohedge links to Pew Research below)
More and more Americans are outside the labor force entirely. Who are they?
http://www.pewresearch.org/fact-tank/2014/11/14/more-and-more-americans-are-outside-the-labor-force-entirely-who-are-they/
Robert Reich (November 2014)
ReplyDelete"People with college degrees continue to earn far more than people without them. And that college “premium” keeps rising. Last year, Americans with four-year college degrees earned on average 98 percent more per hour than people without college degrees. In the early 1980s, graduates earned 64 percent more [but] a college degree no longer guarantees a good job. The main reason it pays better than the job of someone without a degree is the latter’s wages are dropping. In fact, it’s likely that new college graduates will spend some years in jobs for which they’re overqualified. According to the Federal Reserve Bank of New York, 46 percent of recent college graduates are now working in jobs that don’t require college degrees. Employers still choose college grads over non-college grads on the assumption that more education is better than less. As a result, non-grads are being pushed into ever more menial work, if they can get work at all. For years we’ve been told globalization and technological advances increase the demand for well-educated workers. This was correct until around 2000. But since then two things have reversed the trend. First, millions of people in developing nations are now far better educated, and the Internet has given them an easy way to sell their skills in advanced economies like the United States. Hence, more and more complex work is being outsourced to them. Second, advanced software is taking over many tasks that had been done by well-educated professionals. As a result, the demand for well-educated workers in the United States seems to have peaked around 2000 and fallen since. But the supply of well-educated workers has continued to grow. The New York Times calls them "Generation Limbo" --- well-educated young adults “whose careers are stuck in neutral, coping with dead-end jobs and listless prospects.” A record number are living at home. Given all this, a college degree is worth the cost because it at least enables a young person to tread water. Without the degree, young people can easily drown." (MY NOTE: I guess that at this rate, one day they'll need a PhD to mops floors.)
http://robertreich.org/post/103472733520
Timothy Taylor (November 2014)
"The age group with by far the biggest rise in those saying they don't want a job since 2000 is the 16-24 age group ... We are in the midst of a social change in which 16-24 year-olds are less likely to want jobs. Some of this is related to more students going on to higher education, as well as to a pattern where fewer high school and college student are looking for work. I do worry about this trend. For many folks of my generation, some evenings and summers spent in low-paid service jobs was part of our acculturation to the world of work. As I've noted in the past, I would also favor a more active program of apprenticeships to help young people become connected to the world of work.
http://conversableeconomist.blogspot.com/2014/11/underutilized-labor-in-us-economy.html