Numbers in labor force continues downward trend

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The percentage of Americans who are working continues to fall. Labor force participation peaked in 1997-98, when about 67 percent of people aged 16 through 64 were employed or seeking work (according to the Bureau of Labor Statistics.

During the past 20 years, it has trended generally downward and now stands at less than 63 percent, a significant drop from even 10 years ago, when the rate remained about 66 percent.

A sharp decline began in 2009, and subsequent improvement in the job market hasn’t altered the pattern. With a slow natural rate of population growth and potential limits on immigration, the implications for the economy are profound.

The aging of the U.S. population is contributing to the decrease in labor force participation, as people who are in their late 50 and early 60s often retire, thus pulling down the percentage.

Moreover, the youngest members of the Baby Boomer generation (those born between 1946 and 1964) comprise a significant portion of the workforce and are now retiring in large numbers.

Although there has been a general and predictable decline among older age brackets, the steepest decrease has been with 16-19 year olds. Participation among this cohort declined from 52 percent in 2000 to 34 percent in 2011 and has stabilized since that time.

Part of the reason is the push for college or other post-secondary training, which has caused delays in entering the workforce. About 70 percent of teens completing high school immediately attend college, compared to 63 percent in 2000. Year-round extracurricular activities also make it difficult for some to work.

This group has never been a large portion of the workforce, and there are clearly benefits to postponing work in order to attend school.

The gender gap in participation had been shrinking for decades but has recently stabilized.

In 1950, over 86 percent of men but only 34 percent of women 16 and older worked. By 2016, the gap had narrowed to about 69 percent of men and 57 percent of women.

Simultaneously, dynamics are changing in the home, with more men participating in household tasks. In 2003, less than 35 percent of men helped with daily food preparation.

In 2017, the proportion had increased to nearly 46 percent, although women remain far more likely than men to take on food preparation tasks (almost 69 percent in 2017).

Social and demographic changes and labor force participation are inextricably intertwined. As the proportion of Americans working continues to decrease, there will be notable and profound implications for the economy and society as a whole.

Dr. M. Ray Perryman of Lindale is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.

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