Workforce Worries

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

By | 2017-07-17T12:22:23+00:00 October 26th, 2015|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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