Municipal Government

Retiring Baby Boomers Don’t Explain the Evaporating Labor Force

August 11, 2015
By John Quinn

Atlanta, Georgia –  The big story missing from the July jobs report is an evaporating labor force participation rate among workers ages 20 through 54. While the falling labor force is  portrayed as just a matter of older workers retiring, their appears to be another side to the jobs report.

"The Great Recession ended in June 2009, and at that time nearly 83 percent of Americans between the ages of 25 and 54 were either working at a job or trying to find one, but since then that percentage has fallen sharply," said Alfredo Ortiz, president and CEO of the Job Creators Network. "If we apply that standard today, six years into the recovery, then we'd be admitting honestly that an additional 2.5 million people in the prime working years of their lives are no longer economic producers, yet not counted as unemployed."

Federal Reserve Bank of St. Louis data shows June of 2009 as the final month of the Great Recession, and a labor force participation rate of 82.9 percent for workers between the ages of 25 and 54. For June of 2015, the rate had fallen to 80.8 percent. The participation rate for all adults had averaged 66 percent or greater for each of the years from 1989 through the start of the 2008 recession, but has declined sharply since then. The July  report showed a rate of 62.6 percent, the 16th consecutive month of less than 63 percent participation and the longest such streak since 1976-78.

"Using the June 2009 participation rate for today's young adult workers, ages 20-24, we'd need to admit that an extra half million of them are also missing from our economy," continued Ortiz. "If we apply the labor force standard that held true when this recovery began and put those dropout younger and prime age workers together, then that's three million unofficially unemployed people on top of the 8.3 million in today's official count – or an unemployment rate that should really be 7.0 percent rather than 5.3 percent."

August 11, 2015

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