Where have all the workers gone?
Photo: Doug Tengdin
Ever since the late ‘90s the labor force participation rate has been falling. There are now over 92 million adult Americans who aren’t working and aren’t looking for work. On its face, that’s a shocking number—almost a third of the population. And 20 million of these folks are in their prime working years. Where did they all come from? And what are they doing?
Source: St. Louis Fed
Actually, it’s not that big a mystery. When the Census Bureau conducts its monthly survey, it asks people what they’re doing. If they aren’t working or looking for work, they usually say why. By comparing their answers from fifteen years ago with now, we get a sense of what’s happening in the labor force, and why people aren’t working.
As with most large statistical trends, a lot of different factors are at work. The data show that young people are staying in school longer and getting more training. In addition, older folks are retiring earlier and living longer. And more middle-aged people have are receiving disability payments—most likely because screening criteria have been relaxed. In some cases, now, SSDI functions as extended unemployment insurance.
Source: Wall Street Journal
Our missing workers aren’t really missing. Young people eventually enter the labor pool. The economy demands more skills, and they need more training. A machinist may need to use calculus, now, to program a cutter tool along nine different axes. Older people are living longer, and many are retiring early. But changing our disability system would be a mess.
The workforce is constantly evolving, adapting to our changing economy. The low unemployment rate isn’t a false indicator. Eventually, companies will have to increase wages. And a new stage of economic growth will begin.
Douglas R. Tengdin, CFA
Chief Investment Officer