Wednesday, 10 October 2012

Labor Force Participation

While the debate rambles on about Welch's conspiracy theory idea (a bit rubbish), here's an interesting chart from Business Insider on labor force participation rate since the 50s.

It was pointed out that labor force participation has dropped to ~63.5% from 67% in the Clinton years but noted the huge jump in overall participation rate due to women entering the workforce starting 50 yrs ago.

Chart 1

Women participation rate doubled from 35% in the 50s to almost 60% today.

Labor force

While at the same time, male rate dropped from 87% to only 70%.

Mens labor force part.

As Business Insider points out:

Why are fewer men choosing to work? For that, we turn to the Census Bureau's 2012 Statistical Abstract. The participation rate is lower for single men than for married men, and marriage rates in the US have been falling for decades, so we'd expect a modest decline from that. Looking by age bucket, it's been pretty steady for single and married men for everyone over the age of 25 since the start of the Great Recession. 
The recent decline we've seen has been primarily among young, single men. For single men age 16-19, participation fell by almost 9 points from 2006-2010. For single men age 20-24 it fell by almost 5 points. This could be for a variety of factors, from men deciding it's not worth bothering to apply for a job at the local grocery store, to men more focused on their education with unskilled work harder to find, to those living at home who decide there's no need for spending money when so much entertainment is free online.
Additionally, the acceleration in the labor force decline began when the oldest baby boomers began turning 60. Yes, because of deflated housing prices and retirement accounts, boomers will work longer than they thought. But 60-year olds still work less than 30-year olds, and that demographic shift is being reflected in the data.
What's more, this decline in the workforce is part of a century-long trend towards working less in the United States. Child labor laws were passed during the Great Depression, restricting child labor. During the Truman administration, the US government instituted the 40-hour work week for federal employees. The passage of Social Security and Medicare reduced incentives for seniors to work as well.

Read the entire article at Business Insiders.

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