Calculated Riskwants us to believe that MOST of the decline in the participation has been due to the aging of the population:
I’ve written extensively on the reasons for the decline in the participation rate. Unfortunately some people haven’t been paying attention. Two key points: • Some of the recent decline in the participation rate has been to due to cyclical issues (severe recession), but MOST of the decline in the overall participation rate over the last decade has been due to the aging of the population. There are also some long term trends toward lower participation for younger workers pushing down the overall participation rate. • This decline in the participation rate has been expected for years. Here are three projections (two from before the recession started). The key to these projections is that the decline in the participation rates was expected.
I have difficulty reconciling that statement with the following observations, followed by the corresponding charts:
- Overall Labor force participation peaked at around 67.1% in early 1997 and maintained that level through early 2001. After falling to 66.1% in late 2003, that level was maintained through mid-2008, after which point the “Great Recession” “incredibly accelerated the aging rate of the population”.
- Curiously, given CR´s interpretation, employment among those 55 and up has been rising steadily since 1996. The Great Recession only provoked a short lull in the level of employment in that age group. I know that if population is aging the number of people above 55 is increasing. But so is the corresponding employment level, i.e. it is not inducing a fall in the participation rate.
- That´s not the case with the prime age work force, those between the ages of 25 and 54. The employment level in that age group dropped like a stone after mi-2008. Many likely are not participating at the moment, but that´s not because they “aged”.
- The participation rate among the really aged, those above 65 has surprisingly increased despite the rise in their number (data only after mid-2008 available). Again, this is not consistent with the big drop in the overall participation rate since mid-2008.