U.S. Unemployment: Retirees Are Not The Labor Exodus Problem
Since 2008, the civilian non-institutional population has jumped by 11.9 million, yet the civilian labor force has only increased by 1.1 million, according to annual figures published by the Bureau of Labor Statistics.
The above numbers speak to a pronounced drop in labor force participation—that is, those working or looking for work—with the participation rate dropping from almost 66 percent throughout 2008 to its current level of 62.8 percent, the lowest it’s been since 1978.
If the labor force participation rate had held steady at its 2008 level, unemployment would be 11.2 percent instead of the current reported rate of 6.7 percent.
That labor force participation has been dropping is undisputed. The question is why.
Is the decline in labor force participation a result of older people retiring en masse, younger people failing to enter the work force, or both?
If it is the former, then Americans can take confidence in the reported unemployment rate of 6.7 percent, that its steady drop is very real and means labor market conditions are in fact improving.
If, however, younger Americans are not entering the labor force and/or middle-aged people are dropping out, quite the opposite. The reported unemployment rate then understates the reality of current labor market conditions. Then, individuals are not looking for work conceivably because there is little work to be found and so they are giving up — in short, an economic calamity.
On one side are those who take the view that what is being observed are actually Baby Boomers leaving the workforce and retiring, such as minnpost.com’s Erik Hare, writing in a piece, “Decline in labor force driven by retirement, not discouragement.”
Hare calls it a “lie” that “this is the result of people giving up looking for work, a sign that the ‘recovery’ is weak.” Instead, Hare points to a Philadelphia Federal Reserve study on the topic that takes a narrow look at Bureau nonparticipation data, concluding that retirements beginning in 2010 began to play a role in driving down the participation rate.
The trouble with the study is that labor participation has been declining a lot longer than since 2010. In fact, it peaked in 1997 at 67.1 percent, and has dropped annually ever since. As the study notes, “retirement had not played much of a role until around 2010.” By then, the rate had already dropped 2.4 percent.
Meaning, retirement cannot be thought to have played much of a role in the participation rates up until that point, and may only be tangentially affecting it now.
http://www.forbes.com/sites/realspi...nt-retirees-are-not-the-labor-exodus-problem/
that are on Food Stamps, Disability & other forms of Government assistance. Thats hardly a robust economy.