Lately whenever we get a new jobs report that shows the official unemployment rate continuing on its slow but steady decline (currently at 7%), we also have to consider the Labor Force Participation Rate, that is, the percentage of the working-age population that is either employed or is actively looking for work, and thus considered to be officially unemployed.
As seen in the below chart, the Labor Force Participation Rate has declined to levels not seen in about 35 years or so, to about 63%.
Or said differently, the percent of people that are classified as actually being in the labor force, (either working or actively seeking work), has sunk to a level not seen since the late 1970s.
Every time these figures are reported and repeated, there seems to be quite a bit of speculation around the causes of this decline. Just why are there relatively fewer participants in the labor force?
Is it simply a matter of demographics as retirements of the first wave of baby boomers (now in their mid-to-late 60s) start to accelerate?
Or are younger workers simply dropping out of the labor force due to the frustration of not being able to find work, either due to a simple lack of openings or having repeatedly failed to secure work in what is still an extremely competitive job market?
The underlying reasons for this drop in participation do matter I think, as they can be used to more effectively create policies and programs to address them, (if that is needed), as well as for HR and talent pros that might need to understand these trends and include them as an input into their workforce planning process.
Chosen excerpts by Job Market Monitor. Read the whole story at