advertisement
Forums

 

AAPL stock: Click Here

You are currently viewing the 'Friendly' Political Ranting forum
Warning - long and wonkish: What should we make of the trend in the labor force participation rate?
Posted by: Ted King
Date: March 06, 2021 06:20PM
[www.investopedia.com]

Quote

The labor force participation rate is a measure of an economy’s active workforce. The formula for the number is the sum of all workers who are employed or actively seeking employment divided by the total noninstitutionalized, civilian working-age population.

IOW, the labor force participation rate is a ratio of all people who are working or want to work to all people capable of working.

[www.politico.com]

Quote

The U.S. unemployment rate has steadily improved since coronavirus shutdowns first rocked the country last spring, dropping by more than half as businesses reopened and Americans headed back to work.

But there’s a catch: The actual share of people in the labor force, either working or actively looking for work, has barely budged since June.

Just over 61 percent of working-age people were employed or searching for a job in February, according to government data — a proportion that has remained largely unchanged for the last nine months as more than 4 million Americans who dropped out of the workforce since the pandemic hit have stayed on the sidelines.

That number, known as the labor force participation rate, is down from 63.3 percent before the pandemic and reflects the largest 12-month drop the country has seen since Harry Truman was president in 1948. It has held steady while other jobs data is continuing to improve: The U.S. economy added 379,000 jobs in February, the Labor Department announced Friday morning, and the unemployment rate dropped just slightly to 6.2 percent.

The slow pace of people returning to the workforce could present a major obstacle to President Joe Biden’s plans for an economic recovery: If fewer people are working, the country’s overall productivity tends to drop, national income falls and the economy shrinks.

“Quite frankly, we cannot build back the economy to where we’d like it to be if we don’t have a better participation rate,” said Jane Oates, a former Labor Department official who is now president of the nonprofit WorkingNation.

Federal Reserve Chair Jerome Powell highlighted the problem on Thursday, saying it is "highly unlikely" the job market will fully recover this year, in part because of all the dropouts.

Labor market dropouts have historically been an economic warning sign because of how many of those people never return to work, economists say. Even if the unique nature of this recession means most do go back — many are parents who are just waiting on schools and child care centers to reopen, for example — it still tends to take longer for disconnected workers to first decide to return to work and then find a job.
- - - - -
The drop-off in participation has been largely obscured by the far more closely watched unemployment rate, which has fallen each month from a dismal 14.8 percent in April to 6.2 percent in February. But that rate conveys only the share of people looking for work against those who already have a job — and ignores those who have disconnected from the labor market entirely, including 4.2 million people in the last year.
- - - - -
Economic policymakers and experts are well aware of the issue, and the Fed's Powell, Treasury Secretary Janet Yellen and other top economic officials have for weeks been warning of a true unemployment rate closer to 10 percent when dropouts and other data are taken into account.

Without improvement, some economists fear the low labor force participation rate could hinder the recovery by contributing to a shortage of workers later this year, if consumer demand picks up faster than people go back to work.

“Everybody’s assumption is people are going to go wild in the fall because people are going to be able to leave their house and spend their money,” said Marianne Wanamaker, a former chief domestic economist at the CEA. “The risk is not that people won’t do that — I think the risk is that we’ll be short of workers.”
Options:  Reply • Quote
Re: Warning - long and wonkish: What should we make of the trend in the labor force participation rate?
Posted by: mrbigstuff
Date: March 06, 2021 06:54PM
Interesting, thanks for posting. I've been saying it's going to be a long, slow road, solely based upon what i see from my neighbors and friends who have lost jobs, some of who supplemented that lost job with income from driving for a "taxi" service that they have now also lost. The economy is going to be re-jiggered in a way that we cannot yet predict.
Options:  Reply • Quote
Re: Warning - long and wonkish: What should we make of the trend in the labor force participation rate?
Posted by: Filliam H. Muffman
Date: March 06, 2021 08:01PM
Even that doesn't properly measure the health/participation of the work force. I said back around 2009 that nearly a million people retired early rather than fight to get re-employed. One former user here kept saying none of the traditional measures (like U6) showed it, but he was never truly able to disprove it.

Another issue is that the largest demographic group of people on minimum wage is women over 25.



In tha 360. MRF User Map
Options:  Reply • Quote
Re: Warning - long and wonkish: What should we make of the trend in the labor force participation rate?
Posted by: Lemon Drop
Date: March 06, 2021 08:06PM
From what I've read, and I've observed the same anecdotally, women represent a disproportionally high number of people who have dropped out of the workforce. The demands of homeschooling children have mostly fallen on them and it was just too much. And the types of jobs that disappeared belonged in large part to women.

It remains to be seen if they'll go back to work when in-person school returns and the economy picks up. If many decide not to, that's a lot of jobs to be filled, but also less family income and fewer career opportunities for those women.
Options:  Reply • Quote
Re: Warning - long and wonkish: What should we make of the trend in the labor force participation rate?
Posted by: August West
Date: March 06, 2021 10:02PM
Quote

The demands of homeschooling children have mostly fallen on them and it was just too much.

I've seen and heard a lot of this.



Options:  Reply • Quote
Re: Warning - long and wonkish: What should we make of the trend in the labor force participation rate?
Posted by: Bill in NC
Date: March 08, 2021 09:51AM
Quote
Filliam H. Muffman
Even that doesn't properly measure the health/participation of the work force. I said back around 2009 that nearly a million people retired early rather than fight to get re-employed. One former user here kept saying none of the traditional measures (like U6) showed it, but he was never truly able to disprove it.

Another issue is that the largest demographic group of people on minimum wage is women over 25.

Yep, every severe recession (e.g. current COVID Pandemic, Great Recession) results in an increase in the number of permanent unemployed, especially older workers, whether they retire earlier than planned or fight like h*** but never land another position.

Buried an aunt not long ago who lost their job of 28 years (entire IT department outsourced) a year or two before the Great Recession.

Despite going back to school (for a 4-year degree) she never landed another job & had to cash in her pension to make it to Social Security at age 62...had a very mean "retirement" until she passed away a little over a decade later.

At over 50 and unemployed I wonder if that will also be my future...



Edited 4 time(s). Last edit at 03/08/2021 09:53AM by Bill in NC.
Options:  Reply • Quote
Re: Warning - long and wonkish: What should we make of the trend in the labor force participation rate?
Posted by: Speedy
Date: March 08, 2021 11:58PM
We need open borders. Come one, come all.



Saint Cloud, Minnesota, where the weather is wonderful even when it isn't.
Options:  Reply • Quote
Re: Warning - long and wonkish: What should we make of the trend in the labor force participation rate?
Posted by: mrbigstuff
Date: March 10, 2021 12:21PM
Quote
Speedy
We need open borders. Come one, come all.

I'm pretty certain that is what Biden is proposing
Options:  Reply • Quote
Sorry, only registered users may post in this forum.

Click here to login

Online Users

Guests: 124
Record Number of Users: 186 on February 20, 2020
Record Number of Guests: 5122 on October 03, 2020