The economy’s big mystery: Why workers are disappearing from the job market
JULY 20, 2014 LAST UPDATED: SUNDAY, JULY 20, 2014, 1:21 AM
BY ZACHARY A. GOLDFARB
THE WASHINGTON POST
THE RECORD
* Unforeseen factors could keep many Americans out of the labor force — permanently
WASHINGTON — Ever since the job market began to recover in 2010, the decline in the unemployment rate has come with a big fat asterisk. The unemployment rate has been going down, the argument goes, but largely because people have stopped looking for work. That’s why the labor force participation rate — the percentage of the population looking for a job or employed — stands at 62.8 percent, down from 66 percent before the recession. The joblessness rate, as a reminder, stands at 6.1 percent.
Now comes a new White House report, prepared by the Council of Economic Advisers, that offers fascinating insights into what might be happening in the job market. The biggest headline in the report is the least surprising. It finds that about half of the decline in participation is the result of the baby boomer generation’s beginning to retire. For years, economists have known and predicted that this would happen. It should be no reason to worry. The report also finds that a sliver of the decline in participation is simply due to the elevated unemployment rate, which is still half a point or so above normal. In all recoveries, some people opt out of looking for work while the unemployment rate is higher than normal. This, thus, is “cyclical,” and also offers little reason for concern.
But the most interesting and alarming part of the report examines what White House economists call the “residual” — the factors beyond aging and cyclicality that explain why people are disappearing from the labor force. This is what we should worry most about. It’s these people who may never return to jobs. The report finds that about a third of the decline in participation is attributable to these disappearing workers. If their exit from the labor force proves permanent, the nation’s economy could suffer for years, never achieving the growth and prosperity it once could.
What’s behind this residual is one of the big mysteries in economics today. As in why, according to the report, it emerged only in 2012. That’s right: For the first two years of the recovery, the decline in labor force participation appears to have been normal, driven by aging and temporary effects from the recession. Only later on — as the unemployment came down and the economic recovery continued — did an unusually large number of workers start to abandon the labor force.
– See more at: https://www.northjersey.com/news/business/biggest-threat-to-economy-comes-from-disappearing-workers-1.1054355#sthash.527eptbX.dpuf
Working in simply a case of incentive. Most things we do in life are based upon some kind of incentive. The more the Government does in terms of assisting people who fit a pre-set criteria of being down on your luck, then more people will do whatever they can to meet that criteria, and that includes falsifying records, working off the books, and outright lying. Much of our public assistance programs rely on a great deal of honesty on the part of the claimant, and that’s a quality in people that is disappearing. On top of all this, we have a political party that is actually using these public welfare programs, combined with class warfare, as a big part of their strategy. Forget this John Steinbeck imagery of our poor. Yes, there are genuine cases, but the system has been hijacked by millions of fakers and liars.
Wow! One of the best paragraphs describing our current situation. I’d add that corporation through the use of perm or temporary staffing, have created an environment that does not reward hard work with any benefits aside from a paycheck. Thus placing people in a situation where they are looking to the government for services that once were available through the their employers. The pressure on the middle class continues to rise to a breaking point, where sadly dependency or revolution become the choices. I.m feeling the latter a better choice!
Example #1 is 99 weeks of unemployment.