Archive for the ‘Labor force participation rate (LFPR)’ Category

What are “prime age men” who aren’t in the labor force doing with their time ?

December 6, 2016

Yesterday, we looked at the falling labor force participation rate (LFPR) among so-called prime age males … aged 24 to 54 … a range that outboards most students and retirees.

About 10 million men fall into that category – unemployed but not looking for work.

One hypothesis is that the LFPR  among prime age males has dropped because – as women have entered the workforce – the men have stayed home to care for family members and do household chores.

According to the Fed’s latest American Time Use Survey, there’s some evidence to support that hypothesis.

In fact, “non-participating prime-age men” spend about 1/2 hour per day more on “household activities & services” than do prime age males who are in the labor force.




But, that’s only a small  part of the story ….


Hourly earnings up, but household income down … say, what?

March 29, 2016

Great analysis by Prof. Mark Perry (AEI Scholar) … entire analysis is worth reading … here’s the essence of the argument.


Question: It’s oft-reported that household income has been falling … but, digging into the data, hourly earnings have been increasing.

How can that be?



According to Prof. Perry’s analysis, the answer lies in “mix” – the composition of households ….


Wages, productivity … and women.

January 7, 2016

Hot topic these days is how wages have remained stagnant for a long, long time … while productivity – think output per labor-hour has soared.

The political explanation: over-sized paychecks to greedy CEO’s have been draining the coffers.

That may be a part of the answer, but I bet it’s statistically insignificant.

I haven’t run the nums, but I bet that zeroing all CEO compensation wouldn’t budge the below chart.


In addition to greedy CEO’s, the batch of suspects usually includes: automation (shifting jobs to machines & computers), globalization (moving jobs to low wage areas), immigration (an influx of cheap labor).

In other words, the supply of labor and the demand for labor are out of whack.

OK, I get that.

But nobody seems to ever mention a pretty obvious bump in the supply of labor ….


More: Is the high cost of childcare coaxing women out of the workforce?

October 27, 2015

In a prior post, we dissected  the declining labor force participation rates in the U.S. …

Splitting the population by gender revealed some interesting differences  in LFPR trends…

Note that from 1965 to about 1999, men (blue line) were steadily leaving the labor force.

But, during that period women (red line) were entering at a faster clip than the men were dropping out … so total LFPR (black line) continued to inch up.

Around 1999, women’s LFPR flattened out … but men continued to leave the workforce … so the total LFPR peaked and started to creep down.

Since 2008, both men and women have been leaving the work force, so the total LFPR has steepened its decline.

But, men are leaving at a slightly faster rate than women.


And, we posted the results of a study indicating that women’s LFPR in the U.S. is low relative to other countries … and declining at a time that it’s increasing in other countries.

Pundits attribute the higher LFPRs in other countries to more flexible work hours and government subsidized childcare.

Let’s look into things a bit deeper … (more…)

Is the high cost of childcare coaxing women out of the workforce?

October 26, 2015

One of the biz show pundits made an off-hand remark that he thought much of the recent decline in labor force participation rates was at least partially traceable to women dropping out of the workforce because of the high cost of childcare.

Plausible explanation that piqued my trust but verify interest, so I did a little digging.

Let’s start with the big picture : The total labor force participation rate (LFPR).


Some takeaways ….

Note that the history breaks into roughly 3 distinct eras.

From 1965 (as far back as I looked) until about 1990, the LFPR  increased by about 8 percentage … almost a straight line, trending up.

Then, coincident to the 1990 recession, the LFPR essentially flat-lined with some bouncing around between 66% and 67%.

Since the 2008 financial crisis and the LFPR has dropped around 4 percentage points … not quite half of the 1965 to 1990 gain.


Splitting the chart by gender is where things start to get interesting.


Nums: More folks saying: “Why work?”

April 8, 2015

It’s not new news that the Labor Force Participation Rate has been falling .

What struck me in March’s  employment stats was that the LFPR is still dropping

LFPR - March 2015

Many economists  say it’s simply demographics — it’s old folks retiring.

Partially true, but certainly not the whole story.


More re: Labor Force Participation Rates

January 17, 2014

Earlier this week, I posted a chart showing that the LFPR among Blacks (the Fed’s data series description)

My observation was:

Black’s LFPR increased by about 7 percentage points since the mid-1970s (earliest that the data is reported) to 2000 – when it peaked at about 66% …. the rate has dropped to just over 60% …. the declining trend has steepened.

A loyal reader suggested that I put those numbers in context … and linked me to a chart that displays all of the Fed’s demographic categories.

His observation: the recent trend has been fairly consistent across all racial categories,

  • Key: Hispanic = purple; White = green; Black = orange



Note that in the late 1990s,  LFPR’s were roughly equal for all groups

Since then, Hispanics have run above average LFPRs …

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Nums: Labor Force Participation Rate hits 30 year low …

January 13, 2014

One of the big headlines last Friday was that the Labor Force Participation rate continued to fall December (which is why the unemployment rate ticked down despite paltry job growth).

More specifically, the LFPR is down more that 4 percentage points since the financial crisis hit.



Let’s put the current LFPR is perspective: Now, about 62.5% of the able-bodied adult population either has a job or is actively looking for one.

Said differently, over 37% don’t have jobs and aren’t actively looking.

Let’s drill down to a couple of demographic groups ….


Nums: Unemployment rate drops again … oh, really?

November 1, 2013

Feds say that “economy continues to recover … as indicated in the drop in the unemployment rate to 7.2%”.


Great chart from Wall Street Daily:



Conclusion: Apparent improvements in the unemployment rate continue to be mostly a reflection of a declining labor force participation rate … more and more folks dropping out of the labor force and staying home.

Frustrated by dim jobs’ prospects or satisfied with the government safety net programs .. or both?

Draw you own conclusion.

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Nums: The jobs report in 4 charts

October 25, 2013

The bruhaha re: the ObamaCare systems implosion overshadowed the belated September jobs report.

To get you up to date …


Nonfarm employment increased by 148,000 in September … analysts were expecting 180,000 … which is about the average for the past 12 months.




Importantly, jobs are being added disproportionately in services (think hotels & fast-food places) … not in manufacturing.




And, there’s more to the story …


Nums: The impact of demographics on the LFPR …

June 6, 2013

Business Insider reports that …

Bank of America economist Michelle Mayer has put out a note on one of the more controversial subjects in economics these days: the Labor Force Participation Rate.

The Unemployment Rate has been grinding down, but everyone has noticed that Labor Force Participation has dropped as well, and it’s been argued that the exodus of people from the workforce (who no longer count as unemployed when they’re not working) undermine the idea of workforce improvement.

BI – repping for Team O — takes delight observing that: “Mayer’s note comes down firmly on the side of saying that the decline in Labor Force Participation is largely secular, and not primarily about the economic malaise.




Hold your pants on, BI.

Here’s how & why Mayer’s analysis overstates the secular impact and understates the economic impact.


Nums: More about the declining LFPR … blame teens, not old folks.

April 30, 2013

Remember March’s employment numbers?

Despite paltry job growth – less than population growth — the unemployment rate went down – because about 500,000 folks dropped out of the labor force.

The LFPR (labor force participation rate) dropped to 63.2%.

The Atlantic published an interesting recap of LFPRs by age group over time.


Note that the LFPR has been   …

  • Increasing for all age groups over 35
  • Holding steady at about 80% for folks 35 to 34
  • Dropping for folks 20 to 24.
  • Dropping big-time for teenagers

While older folks are participating more in the labor force, their LFPR is substantially less than other age groups (except teens) … so the aging population is “mixing down the overall LFPR.

What’s up with teens?

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