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95,745,000: Record Number Not in Labor Force as Boomers Retire

Posted by addisethiopia on May 9, 2018

The number of employed Americans has broken eight records since President Trump took office, but on the not-so-sunny side, the number of Americans not in the labor force also keeps increasing, breaking six records since Trump took office in January 2017.

Last month, a record 95,745,000 Americans were counted as “not in the labor force,” meaning they are not employed and are not seeking a job, according to the Labor Department’s Bureau of Labor Statics. “This category includes retired persons, students, those taking care of children or other family members, and others who are neither working nor seeking work,” BLS said.

With record numbers of people not in the labor force, the labor force participation rate has remained stubbornly low in recent years.

In April, only 62.8 percent of the non-institutionalized, civilian population over the age of 16 was either working or actively looking for work. This compares with an all-time high of 67.3 percent in the first four months of 2000.

In a March 2018 report, the Congressional Budget Office noted that a lower labor force participation rate is associated with lower gross domestic product and lower tax revenues. It is also associated with larger federal outlays, because people who are not in the labor force are more likely to enroll in federal benefit programs, including Social Security.

This past January, the Congressional Budget Office projected that the labor force participation rate will continue to decline over the next 30 years from the current 62.8 percent to 61.0 percent in 2027 and to 59.2 percent in 2047.

According to that report, “The continued retirement of the baby-boom generation is the most important factor driving down the overall participation rate.” The first Baby Boomers — people born between 1946 and 1964 — turned 65 in 2011.

CBO has identified three factors pushing down the participation rate, and three factors pushing it up in future years, as follows:

On the downside:

— First, younger workers who are replacing Baby Boomers in the labor force tend to participate in the labor force at lower rates.

— Second, the share of people receiving disability insurance benefits is generally projected to continue increasing, and people who receive such benefits are less likely to participate in the labor force.

— Third, the marriage rate is projected to continue declining, especially among men, and unmarried men tend to participate in the labor force at lower rates than married men.

On the upside:

— First, the population is becoming more educated, and workers with more education tend to participate in the labor force at higher rates than do people with less education.

— Second, the racial and ethnic composition of the population is changing in ways that increase participation in the labor force. CBO expects Hispanics to make up an increasing share of the population, which would increase the overall labor force participation rate, and it expects non-Hispanic whites to make up a diminishing share, which would decrease the participation rate — resulting, on net, in an increase.

— Third, increasing longevity is expected to lead people to work longer.

Source

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