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No, Millions of Americans Have NOT Dropped Out of the Labor Force Just Because They’re Retiring Baby Boomers

George Washington's picture




 

Zero Hedge notes that the number of Americans in the labor force has dropped to 1978 levels:

The civilian labor force … dropped from 155.3 million to 154.9 million, which means the labor participation rate just dropped to a fresh 35 year low, hitting levels not seen since 1978, at 62.8% down from 63.0%.

 

 

And the piece de resistance: Americans not in the labor force exploded higher by 535,000 to a new all time high 91.8 million.

Charles Hugh Smith shows the disturbing trend line:

The mainstream media portrays the cause of this crash as simply being retiring baby boomers, as shown by the following screenshots from a Google search:

But a February 26 report from the nonpartisan Economic Policy Institute shows this is false:

Since the start of the Great Recession over six years ago, labor force participation has dropped significantly. Most of the drop—roughly three-quarters—was due to the lack of job opportunities in the Great Recession and its aftermath.   There are now 5.8 million workers who are not in the labor force but who would be if job opportunities were strong.

 

***

 

More than 70 percent of the 5.8 million missing workers are under age 55. These missing workers under age 55—4.2 million of them—are extremely unlikely to have retired and are therefore likely to enter or reenter the labor force when job opportunities substantially improve.

 

***

The Washington Post noted in January:

The participation rate for workers between ages 25 and 54 fell sharply during the recession and still hasn’t recovered.

 

Obviously, retirements can’t explain this:

Credit: Calculated RiskCredit: Calculated Risk

So, what’s going on? One theory is that the weak job market is causing people to simply give up looking for work — they’re crumpling up their résumés and going home. An recent study from the Boston Fed suggested that these “non-inevitable dropouts” might even account for most of the decrease. Among other things, the authors noted that the labor-force decline has been far sharper for all age groups than simple demographics would predict.

 

***

 

So, why does the size of the labor force matter? If people are leaving the labor force for economic reasons (and they’re not going back to school), it would mean that the economy is in much worse shape than the official unemployment rate suggests. The jobless rate is officially 6.7 percent, but that only counts people who are actively seeking work — not labor-force dropouts. [Remember, you have to include labor-force dropouts in order to arrive at a useful unemployment number.]

In other words, the conventional explanation holds no water.

Despite all happy talk to the contrary, we have a “jobless recovery” – a permanent destruction of jobs – which is a redistribution of wealth from the little guy to the big boys. (And see this.)

No wonder Americans aren’t feeling the love.

And everything the government has been doing since 2008 has made unemployment much worse. And  here and here.

 

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Sat, 03/15/2014 - 15:07 | 4552421 novictim
novictim's picture

You were lucky, simple.  And (!) you took the opportunity when it presented itself.  You rode the rushing current from the golden years post WW2...but's it's now a dried up stream.

Don't let your success (and fortunate circumstance) give you delusions of your own greatness.

Opporunities are still around, no doubt, but they are just getting smaller/fewer...and shrinking on an exponential rate.  Jobs are consolidated.  Play a game of monopoly and you will get the idea.  

BTW...Which of your neighbors kids will you bequeth that business to when you die?  None of them?

Sat, 03/15/2014 - 16:18 | 4552615 simplejustice
simplejustice's picture

Obviously,the one the one that can afford to pay the taxes. BTW, I usually meet luck at the corner of opportunity and preparation.

Thanks for sharing.

Sat, 03/15/2014 - 23:30 | 4553861 FredFlintstone
FredFlintstone's picture

My hat is off to you, sir.

Sun, 03/16/2014 - 15:26 | 4555775 simplejustice
simplejustice's picture

Thanks,how is Wilma doing?

Sat, 03/15/2014 - 14:39 | 4552335 kellycriterion
kellycriterion's picture

We're saved! The Old Lefties have landed? Onward Democratic Socialism! Onward Social Engineering! Onward Swedebots!

Where's Randypants? Why can't we get interviews with Kirchner and Maduro?

Sat, 03/15/2014 - 14:02 | 4552247 kellycriterion
kellycriterion's picture

Engineering? Did you say engineering? We all know were the real money is, the guaranteed money. I suppose if you must, off the top of my head I'd guess aviation. Heavy concentration of government programs, contractors, suppliers, subsidies.

Sat, 03/15/2014 - 13:34 | 4552170 Stuck on Zero
Stuck on Zero's picture

I  can tell you where a lot of the labor force went.  In the science and engineering professions tens of thousands have left for other countrys. The West Coast lost at least a hundred thousand to India. Taiwan, Hong Kong, and China. 

 

http://www.soc.duke.edu/GlobalEngineering/pdfs/media/americasloss/bw_why...

 

Sat, 03/15/2014 - 17:22 | 4552326 RaceToTheBottom
RaceToTheBottom's picture

If the US educated foreigners are leaving, which I believe is only happening to a few, high end guys with the money to go home and bump-start full industries, a larger amount are coming to the US (either virtually or physically) with their third rate educations taking the jobs of Americans.  If not taking all of them, they are depressing the salaries for the rest.

Now I admit STEM jobs still pay the most, but they should pay the most since they take a lot of work and the profit motive MUST provide some motivation for our best and brightest to want to go into STEM careers.

Otherwise they will choose to be drug dealers or worse, Wall Street criminals (employees)...

Sun, 03/16/2014 - 01:22 | 4554070 pitz
pitz's picture

STEM jobs don't "pay the most" though.  STEM pay is abysmal, compared to compensation in the financial sector, or even compared to law enforcement. 

Sat, 03/15/2014 - 13:37 | 4552187 I Write Code
I Write Code's picture

That's a bunch of crap by traitors who want them all to stay in the US and do the work for us at slave wages.

Imagine a US in which engineering pays so little that no rational American student ever studies it.  Do you think we'd survive ten years?

Sat, 03/15/2014 - 13:32 | 4552167 Seeking Aphids
Seeking Aphids's picture

Great post T!  It needs to be remembered that unions were created as a means of defending workers from the depredations of unethical corporations. The destruction of the unions in the UK and the USA resulted in the ongoing whittling away of employee rights, benefits and salaries by corporations and governments. These rights (retirement benefits, unemployment insurance, medical insurance, paid vacations) were hard fought for and won only through years of struggle. All of these rights are now being undermined or terminated. Young workers, often brainwashed by mainstream media/schools into thinking that unions are 'evil' or 'communist', have walked away from one of the only organisations that actually stands up for their rights. There are many problems with unions and union organisers (who have at times been corrupt); unions are certainly not a panacea to all the problems facing modern workers and their sometimes rigid organisational structure may not always fit with modern working situations, imo. They may, however, provide a necessary counterbalance to the force of corporations and governments intent on exploiting workers.

Sat, 03/15/2014 - 22:03 | 4553681 zionhead101
zionhead101's picture

IT unions, if there was ever a klusterfuck, that would be an NERD union,

 

More fucking PATHETIC than the FSA,

 

Long ago STEVE-JOBS said it best, .... OBAMA asked "How can we get the iPHone to be made in the USA"

Job's replied "It's never coming back"

The problem is that nobody wants the USA worker, and nobody wants to business in the USA with all the fucking EPA/DEQ/FBI/DHS looking up your asshole telling you how to care and feed your drone's.

*

Unions were fine in the INDUSTRIAL revolution, but they have no place in the world where a man uses his brain, rather than his arm's.

Programming requires 12+ hours a day stints, ... always been this way and always will.

The problem is that UNION type job's have gone to the ROBOT, ... get over it.

 

Sat, 03/15/2014 - 14:26 | 4552294 kurt
kurt's picture

100 up arrows. WAKE UP from your programming people. Yes it was unions and a generation of WWII veterans that they were afraid to dissappoint. We need the Unions now worse that at any time and we need to make the politicians afraid!

 

Sat, 03/15/2014 - 14:59 | 4552396 Emergency Ward
Emergency Ward's picture

I hope you are not including public-employee unions and especially the mobster Police Syndicates in your defense of unions.  Politicians afraid of them (govt-employee unions)?  I wouldn't call it fear, more of a symbiotic relationship formed to loot and suppress the taxpaying serf class.

Sat, 03/15/2014 - 18:02 | 4552954 Seeking Aphids
Seeking Aphids's picture

You are right that some unions are exclusive and corrupt..they do more harm than good. This does not mean that the whole concept is flawed. I admit that there are tons of problems with unions...they are the lesser of two evils. Without unions employees have very little ability to negotiate or improve their working conditions. That is the sad reality. Just look at the pathetic conditions in the USA today..almost third-worldish - getting there soon.....  

Sat, 03/15/2014 - 22:52 | 4553787 Greenskeeper_Carl
Greenskeeper_Carl's picture

If private companies want to unionize, no problem, but public sector unions should be banned. Collective bargaining against a group of private citizens, ie a board of directors or the shareholders, fine, whatever. But you should not be allowed to collectively bargain against the American taxpayer, extorting a pay and benefits package beyond what any private sector worker gets, forcing the serfs to pay for it, and never being fired, no matter how horrible you are at your job

Sun, 03/16/2014 - 03:27 | 4554150 DontGive
DontGive's picture

Don't have a good taste for unions. But I agree with Carl. ^^

Public sector + Union = Assrape everytime. Unless you are an insider.

Sat, 03/15/2014 - 13:17 | 4552129 El Vaquero
El Vaquero's picture

GW, I've been through all of this stuff, and the ONLY age group to have increased its participation rate since 2000 is the 55+ age group:

 

http://research.stlouisfed.org/fred2/graph/?id=LNS11324230,

 

(Sorry, but I didn't see a non-seasonally adjusted, but at least this one isn't manipulated as badly as some other BLS garbage.)

 

Could it be that ZIRP plus understated inflation means that they don't have enough to retire on unless they like eating Alpo soufflé? 

Sat, 03/15/2014 - 23:04 | 4553823 AGuy
AGuy's picture

"GW, I've been through all of this stuff, and the ONLY age group to have increased its participation rate since 2000 is the 55+ age group:"

I suspect its because they are taking low wage/part time jobs. At lot of 55+ are empty nests, no student loans, and probably have there mortgage paid off, or have downsized to a condo. They can get by working at a low wage since they don't have the debts and bills as the younger generation. Also the 62+ are probably getting Social Security, Pensions, etc and need a part time job to meet ends since they get squat interest on savings. I am sure this isn't the case for all 55+ but I think its a significant factor.

 

Sat, 03/15/2014 - 19:11 | 4553148 Berspankme
Berspankme's picture

Bls has seasonally adjusted that number down to 3 guys

Sat, 03/15/2014 - 13:08 | 4552110 kellycriterion
kellycriterion's picture

Back in 09 on another blog I posed the question "Why do you believe there must be a collapse? Why won't all this be "paid for" with lowered living standards?"

I posed that question several times at various venues for the next few years to people predicting collapse. I never received an intelligent response.

The TRUE COST of the welfare, entitlement, warfare, financialization state is greater than the staggering sticker price. All the corruption, wasteful consumption, misuse of resources has equal or greater cost compared to the risk costs. Bad money drives out good, isn't just a monetary concept. Bad activities drive out good. But seemingly people can't quite grasp opportunity costs.

Instead we have the perpetual blame where effects are portrayed as cause. The cause of things like income inequality, labor arbitrage, capital flight lite. When you're drowning in an ocean of corruption it's easy to play the blame game. You can avoid confronting your own complicity, and facing the really scary people. Ya know the political class, the alphabet soup of thugocracies with all the well organized heavily armed men.

The real problem isn't people who produce real stuff. Even if they're corrupt, even if they're winners in the confiscation/cost shifting games, even if they're not really winners but just better than you. And no it's not about running out of resources or too much technology.

Sat, 03/15/2014 - 12:40 | 4552001 Ms No
Ms No's picture

I guess between the Visas in relation to the unemployment rate and the borders porosity combined with claims that hordes of terrorists were coming for us.... all things were made clear.... American standard of living priority target #1.

Sat, 03/15/2014 - 12:27 | 4551951 Reaper
Reaper's picture

Their messiah's god was found dead. His priests and true believers would be mocked and driven out, unless they kept the truth hidden. Lie or perish.

Sat, 03/15/2014 - 12:27 | 4551948 RevRex
RevRex's picture

So people who willingly retire DON'T actually want a job?

 

The Socialist Semite Democrat Media prints what the Bankster Cartel tells them to print.

Sat, 03/15/2014 - 12:10 | 4551904 Ms No
Ms No's picture

That 1 million men under 25 are gonna make the sky shake one day.... by then probably be millions....

Sun, 03/16/2014 - 03:23 | 4554144 DontGive
DontGive's picture

Sure they will. They will cast a spell and the heavens will open up and cast down upon the orcs. Then they will type "afk bio" as they go play with themselves in the bathroom for a minute..

Sat, 03/15/2014 - 12:34 | 4551970 ElvisDog
ElvisDog's picture

Most of them aren't that ambitious. As long as the EBT card can buy them hot pockets and they can play League of Legends 24/7 peace will be maintained.

Sat, 03/15/2014 - 11:35 | 4551798 I Write Code
I Write Code's picture

So of the 1.6m over 55, most of those are victims too just like the other age groups, maybe 10% have a reasonable choice of early retirement and are taking it.  Make that 5%.  Or less.  IOW all those headlines you show are truly BS, the result of a Jay Carney, White House, Obamanation, pure lies and pure evil.

Good piece.

Sat, 03/15/2014 - 06:20 | 4551446 new game
new game's picture

descibing me to a tee at 57, msm once again lying, or shallow research. but, truth be said, i am disrupting my life to ekk out 5 more years til the day arrives, and then it isn't certain. all this wasted energy, some days i wish to channel it to the souce...

Sat, 03/15/2014 - 03:11 | 4551345 pitz
pitz's picture

Over 1 million "guest" workers (aka scabs) allowed to work in the United States, primarily in high quality IT and engineering jobs, on the H-1B visa.  Meanwhile most employers are receiving so many job applications from qualified US citizen scientists and engineers that they don't even bother to respond to them.  Yahoo receives 12,000 resumes per week from qualified talent, yet still uses H-1B's.  Untold numbers of young men and women, as well as the older crowd, have been either disenfranchised from the labour market, or had their salaries suppressed because of the anti-worker government that is hell bent on destroying our domestic talent and domestic R&D capability.

First thing a responsible government would do is deport every last H-1B and individual who derived their Green Card from a H-1B, to allow high skilled Americans to get back to work and take their rightful place in the economy. 

Sat, 03/15/2014 - 11:37 | 4551808 Vendetta
Vendetta's picture

"First thing a responsible government would do ....."

How many politicians from either dominant political party ever mention any of this?   They avoid the topic like the bubonic plague.  I have never heard a serious debate in the political arena regarding any of it.   Its not like they have to worry about H-1B visa holders' votes but, alas, their corporate masters will cutoff the funding for their re-election.

Sun, 03/16/2014 - 05:10 | 4554268 newworldorder
newworldorder's picture

You are 1000% correct. But dont blame just the government. As American workers we remain willfully ignorant of what is happening to the "other guy." We do not want to know. We have bought the garbage of the employment at will concept of individualism.

Most are unable to conduct critical thinking as to the cause of our economic problems. This is what the economic elite and the bought politicians are counting on to perpetuate their economic stranglehold of the American worker.

Sat, 03/15/2014 - 01:42 | 4551288 Aquarius
Aquarius's picture

"After the war people said, 'If you can plan for war, why can't you plan for peace?' When I was 17, I had a letter from the government saying, 'Dear Mr. Benn, will you turn up when you're 17 1/2? We'll give you free food, free clothes, free training, free accommodation, and two shillings, ten pence a day to just kill Germans.' People said, well, if you can have full employment to kill people, why in God's name couldn't you have full employment and good schools, good hospitals, good houses?"

 

Tony Benn (1925-2014): - To a PBS documentary in 2000.

http://www.pbs.org/wgbh/commandingheights/shared/minitext/int_tonybenn.html

 

Don't worry, a new War is  again being manufactured by the USA which will reduce the unemployed (and many others).

Ho hum

Sat, 03/15/2014 - 21:57 | 4553662 Buck Johnson
Buck Johnson's picture

Yep, totally amazing.  He was correct and we are going into another war that will reduce people.  But more importantly to cover for the imploding economies around the planet.

Sat, 03/15/2014 - 11:48 | 4551844 The.Harmless.Who
The.Harmless.Who's picture

 

 

 

Whatever your position, the so-called left or the so-called right, Tony Benn was an absolute legend:  Stood up against Zionism (which after Yellen will host its FOURTH successive Fed chair in Fischer), Tony Blair and George Bush and their wars *OF* terror. 

 

I know most people here hate Social-Democracy, of which Benn was an advocate of, but it really depends on "systems" and "people"; in the UK, most people are content with a social contract (a state pension, and universal health-care in return for tax;  this is better than war + lining pockets of congressmen for tax right?).  In the US, the system of fairer taxation and the american dream is a system (I have a love for it), but when have we seen a fair system of taxation or the american dream recently? 

 

Look, I like private industry, and innovation, but should water and energy be in the hands of venture too-big-to-fail venture capitalists? Also, always question the myth that only "private enterprise" provides innovation, and Governments don't have zip.  Well, public money sent man to space, invented the internet, and built concorde. 

 

It depends on the Government that you have, and not the so-called system of left vs right. 

 

 Anyway, regardless, just wanted to say that the man was right about injustices and the racket that is war. 

 

 

 

Sat, 03/15/2014 - 19:14 | 4553156 Berspankme
Berspankme's picture

I believe it was Adams who said "capitalism is a system for moral men"  We have no/very few moral men

Sun, 03/16/2014 - 09:52 | 4554561 Canoe Driver
Canoe Driver's picture

There are few moral men anywhere, and where there are, the morality is, of course, largely relative. So, if Adams was right, capitalism had no chance to begin with. Logically, then, we either accept a system designed by and for an immoral populace, which is what we are doing, and by which we are effectively doomed, or we seek to construct a system of objective and generallly accepted moral principles, and enforce them, which we manifestly cannot do.

Therefore, humanity has failed. And if it has, every one of you who is sending the kids off to college at great personal expense and sacrifice, is either in denial or incapable of reason. And if the vast majority of humanity is either in denial or incapable of reason, then, again, humanity has failed. Quod erat demonstrandum.

Sun, 03/16/2014 - 12:18 | 4554981 simplejustice
simplejustice's picture

Its the message. I have heard people tell young souls,"all you need is a good education" stay in school and the world will lay at your feet,you'll be set for life. I agree, it's good advice, but should also come with qualifiers, such as education is a tool box, you will need to acquire the tools for, so you can build that "great life".

Just getting an education, is in no way a guarantee of a "great life"it is only a starting point. The real work comes with the application of the tools to the project.

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