Labor Force Participation Is Lower Than It Has Been In 30 Years — Why It Matters And Why It Doesn’t


Talking Points Memo has this interesting article Labor Force Participation Is Lower Than It Has Been In 30 Years — Why It Matters And Why It Doesn’t.

There’s no single, tidy explanation for what triggered the increase in the first place or why it’s come to an end, but the single clearest factor is that last century women began pouring into the work force — a phenomenon that came to an end in the last decade.

“The women who are going to enter have entered,” says Dean Baker, co-founder of the Center for Economic and Policy Research. All else being equal that explains why the labor force participation rate would flatten.

Other factors have combined to bring it down. The country’s aging population means we have an aging workforce — and that means a bigger-than-usual segment of the labor force is retiring in large numbers. Compounding that is the fact that large numbers of young working age men are not working. The Chicago Fed explored these trends in greater detail and concluded that the labor force participation rate will continue to decline well into the future.

The following graph shows how labor participation rate varies from country to country and over time.  The article explains many of the reasons for this beyond the few reasons I quoted above.

Graph of Labor Participation Rate

The explanation for a lot of this behavior falls smack, dab in the middle of Elizabeth Warren’s area of expertise.

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