While the unemployment figure dropped slightly in March, what caught everyone's attention was the 500,000 who left the workforce, no longer working or looking for work, prompting the Washington Post to put out an “all points bulletin” for missing workers.
The 63.3 percent workforce participation rate is the lowest since 1979, and three quarters of those are under age 55.
“Perplexingly,” wrote Jim Tankersely at the Washington Post, “the driving force behind the decline does not appear to be baby boomers beginning to retire, an event economists have long predicted would shrink the size of the workforce. It’s people in the prime of their working years, ages 25 to 54, who began tumbling out of the job market in the early 2000s and have continued to disappear during the recovery.”
“Indeed, the participation rate for Americans between 55 and 64 years old held steady at a relatively high 65 percent. On the other hand, participation by the 25-29 age group was the lowest since record-keeping started in 1982,” Reuters reported.
Fewer workers means lower productivity and less economic growth. Michelle Meyer, a senior U.S. economist at Bank of America Merrill Lynch, told the Washington Post that her real growth projections “have fallen from 3.25 percent a year in the mid-2000s to 2.25 percent today — all because of the change in participation levels.”
“People are just giving up the search for work. A lot of them would like to work and they aren't. That is a serious sickness in the economy,” Peter McHenry, assistant economics professor at the College of William & Mary in Williamsburg, Va., told Reuters.
A Wall Street Journal editorial on Monday pinned blame partly on an education system that does not prepare workers for the real economy.
But WSJ also pointed to a culture of dependency fostered by government largesse, noting research by Casey Mulligan of the University of Chicago which “shows that the generosity of federal benefit programs means that workers face very steep financial disincentives to take a low-wage job. The benefits phase out as they begin to work.”
Eric Schulzke writes on national politics for the Deseret News. He can be contacted at firstname.lastname@example.org.
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