Friday, October 7, 2016

Labor Force Participation Rate Expected to Fall Through 2060

The Labor Department projects the labor-force participation rate will decline gradually in coming years and decades through the year 2060.

No doubt, Austrian-lites, who are always suspicious of government data will love this one. They will use it ad nauseum as "proof"that the Federal Reserve will never be able to raise interest rates.

Of course, the declining participation rate has nothing to do with the boom-bust cycle, which is what the Fed manipulates.

The Wall Street Journal
The labor force is defined as those people with a job or those actively seeking a job. The controversy over this figure owes to the fact that perhaps a few million Americans do not have a job, and would like a job, but are so discouraged by the economy that they have stopped looking.

But the vast majority of Americans outside the labor force are there for a clear reason: They are current high school and college students, caretakers or stay-at-home parents, the disabled or retirees (including Americans deep into their 80s, 90s and even 100s)...

The Labor Department projects the labor-force participation rate will decline gradually in coming years and decades. Remember that many Americans want to retire. If the economy is successful, they will be able to do so, and their participation rate will fall...

The vast majority of people in their prime working years already work. They will continue to in these projections. The Labor Department thinks people ages 16 to 24 will continue the trend of recent decades where more years spent in school translates to lower work rates [RW note:This probably has a lot to do with government promoting and financing usless additional education... 
[T]he likeliest scenario is that, even with an excellent job market, Americans will need to brace for a future where a growing but aging country means a larger—not smaller—number of Americans will be outside the labor force.

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