Friday, July 24, 2015

LABOR | Dan Coats Opines on Low Participation

Although unemployment has fallen, the civilian labor force participation
rate has not yet recovered. Chart of BLS data by the St. Louis Fed.
In October last year I posted here something on the decline in labor force participation. It had more than 1,000 page views and I added two follow-up posts.

Last week the Joint Economic Committee of the Congress held a hearing on the subject.

Sen. Dan Coats (R-Ind.), chairman of the JEC, yesterday wrote in the Washington Times about possible explanations of the decline in labor force participation, based on the hearing:
  • Baby boomers retiring? He notes that while Americans are living longer, which means more retirees, the participation rate for older workers has been rising. (One reason is that the age for pickup of Social Security has been rising along with longevity.)
  • Younger people entering the workforce later? Yes, he says that more young people are delaying the start of the working careers by remaining full-time students.
Coats adds other explanations that persuade him:
  • Unexpectedly slow recovery from the deep financial crisis of 2007-08, and the difficulty that  laid-off workers have had in re-entering the workforce. 
  • Federal disability programs, described as a "shadow unemployment program", because they reduce incentives to look for work.
  • A rising number of single-parent families, where the head of household has difficulty holding down a job at the same time as looking after children.
Other explanations are offered in my three prior posts. The latest data suggest a possible bottoming-out of the rate.