In the News

Where Have the Workers Gone?

Jessie Romero of the Rich­mond Fed ana­lyzes why so many peo­ple are leav­ing the labor force, and what are they doing after they exit:

Where Have All the Work­ers Gone?, by Jessie Romero, Rich­mond Fed: Since Sep­tem­ber of last year, the unem­ploy­ment rate in the Unit­ed States has declined near­ly a full per­cent­age point, from 9 per­cent to 8.3 per­cent. On its face, this is an encour­ag­ing sig­nal about the health of the labor mar­ket. But some of the change is due to a poten­tial­ly trou­bling trend: a dra­mat­ic decline in the num­ber of Amer­i­cans who are part of the labor force. Prior to the reces­sion, 66 per­cent of the pop­u­la­tion (not count­ing active duty mil­i­tary or peo­ple in a nurs­ing home or in prison) over the age of 16 was in the labor force. Just four years later, this rate — known as the “labor force par­tic­i­pa­tion rate,” or LFPR — has fall­en to 63.7 per­cent. While this might not sound like a large decline, it is unprece­dent­ed in the post­war era. The dropoff is all the more strik­ing because it does not include unem­ployed work­ers who are active­ly seek­ing work; such work­ers are still con­sid­ered to be part of the labor force. It is only when the unem­ployed decide to stop look­ing for jobs, per­haps because they have given up on the pos­si­bil­i­ty of find­ing one, that they are con­sid­ered out of the labor force…


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