More Americans are not working, Labor Force Participation rate

[Puffy Fish]

This is anecdotal personal observation, but I've noticed it seems there are more people who are not working in jobs these days than there were in the 1990s.

This despite the official unemployment levels being low.

So that leads us to take a look at the Labor Force Participation Rate data.

As of October 2024, the Labor Force Participation Rate (LFPR) is 62.6%.

Excluding the years after the Covid pandemic (January 2020), the Labor Force Participation rate hasn't been this low since very early November 1977.

sources:
Civilian labor force participation rate (2004-2024)
https://www.bls.gov/charts/employment-si...n-rate.htm
United States Labor Force Participation Rate (1948-2024)
https://tradingeconomics.com/united-stat...ation-rate

Keep in mind the Labor Force Participation rate stayed at or above 66% at all times between October 1988 and September 2008, and much of the time it was higher than that, hovering around 66.4%.

Now, in the 1970s the number of women in the labor force was lower than it is today.
(In 1977 the female labor force participation rate was 50.8%)

Could aging demographics of the population perhaps help explain this?
It appears not.

The Labor Force Participation rate for the segment of the population over age 55, as of October 2024, is about the same rate as it was at the end of August 2007. This was right before the U.S. entered the December 2007 Recession.

It only seems somewhere between 1 to 1.4 percentage points lower than it was between July 2009 and December 2019.

source:
Labor Force Participation Rate - 55 Yrs. & over
https://fred.stlouisfed.org/series/LNU01324230

About 37.3% of the civilian U.S. adult population is age 55 or older.

Using some basic calculations, we can estimate that this older age group could only be responsible for 13.2% of the decrease.

calculations
66 - 62.6 = 3.4 (total decrease in LFPR)
average of 1 and 1.4 is 1.2 (drop in older LFPR specifically)
1.2 multiplied by 37.3% is 0.4476 (total drop in LFPR that older are responsible for)
0.4476 divided by 3.4 = 0.131647 or 13.2%

[Puffy Fish]

The U.S. male labor force participation rate right now (for August 2024) is 68.0%. Compare that to the following past years:

1970 - 79.7%
1990 - 76.4%
2005 - 74.4%
2023 - 68.1%

[Sunsettommy]

It doesn't help when they penalize people wanting to earn more income while they live off Disability money which they had paid into the system over their years of employment thus drives down the labor participation.....

[Puffy Fish]

Younger generation of adults increasingly dropping out of labor force

It's not so surprising. Low compensation and dim hope for the future leads to lack of motivation. Many in the younger generation are in a state of "psychological retreat", a sort of subconscious emotion where the body tries to "protect itself", and so they are limiting their expenditure of effort.


Gen Z are increasingly becoming NEETs by choice--not in employment, education, or training , by Orianna Rosa Royle, Fortune (magazine), 6/21/24

There's a growing cohort of Gen Zers who are refusing to grow up and embrace life’s major milestones to adulthood, like getting some form of qualification or joining the world of work.

Instead, they're opting to become NEETs -- not in employment, education, or training -- and creating record levels of youth unemployment around the world.

According to the International Labour Organization, about a fifth of people between 15 and 24 worldwide in 2023 are currently NEETs. In Spain alone, over half a million 15-to-24-year-olds are neither studying nor working. Meanwhile in the U.K., almost three million Gen Zers are now classed as economically inactive -- with 384,000 youngsters joining the “workless” class since the Covid pandemic.

The studies don't delve into what’s inspiring young people to ditch the rat race and opt for a life under their parent's roof or on public subsidies, but separate research highlights that even if they did start climbing the corporate ladder, buying a home of their own still feels like an impossible task. Adulthood milestones are seemingly out of reach anyway Reams of research shows that those in their early 20s are earning less, have more debt and see higher delinquency rates than millennials did at their age. Credit reporting agency TransUnion found that 20-somethings today are taking home around $45,500, while millennials at their age were earning $51,852 when adjusted for inflation.

Despite earning less, young people today are being forced to dig deep for basic necessities like food, groceries, and gas, thanks to inflation. Meanwhile, house prices have increased more than twice as fast as income has since the turn of the millennium. This divergence goes a long way in explaining why young people may feel like saving -- or even working --towards the future is futile. As one Gen Zer noted in Fortune: "I'm just focusing on the present because the future is depressing." Hustling is so last season Hustling, girl bossing or "work hard, play harder" just doesn’t quite have the same grip on Gen Z as it did on millennials starting out.

Many young people today would rather protect their well-being than compete their way up the corporate ladder only to not be able to afford the McMansion their parents bought for a fraction of the price."

Even those who do want to work, don’t want a career. Instead, many Gen Zers are eyeing up easygoing jobs that don’t require regular overtime, antisocial working hours, or substantial responsibilities.

Non-grad Gen Zers are picking up the tools and taking up trade jobs in record numbers.

Mental health struggles
At the same time as unemployment among the youth is rising, their mental health is in decline.

Gen Z are nearly twice as stressed out as millennials were at their age; More than a third of 18-24-year-olds are suffering from a "common mental disorder" (CMD) like stress, anxiety, or depression; And Gen Zers who are working are taking significantly more sick leave than Gen Xers 20 years their senior.

"Youth worklessness due to ill health is a real and growing trend; it is worrying that young people in their early 20s, just embarking on their adult life, are more likely to be out of work due to ill health than those in their early 40s," researchers at the think tank Resolution Foundation (RF) previously told Fortune.


A shortage of young men in the workforce could weigh on housing, Social Security, and growth for years to come, by Jennifer Sor, Business Insider, June 9, 2024

Declining workforce participation among younger men could weigh on the US economy for years.
The trend could be a drag on economic growth, housing, and Social Security funds, experts say.
The effects could last decades as there are no clear ways to spark a turnaround.
America's job market is mysteriously short of young men.

According to Carol Graham, a senior fellow of economic studies at the Brookings Institute, the labor force participation rate of prime working-age men has been declining over the last twenty years. Today, 11% of men aged 25-54 don't have a job and aren't looking for one, more than triple the percentage recorded in 1955, when just 3% were out of the workforce, according to data from the Bureau of Labor Statistics.

That amounts to around 7.2 million prime working-age men who aren't working. That's introduced a host of problems for the economy, adding to the strain on government services and social safety nets, Graham and other experts told Business Insider.

"Some of them drop out [of college] and are just sort of forlorn and have no purpose or meaning in life. They're not very likely to be married. They're very likely to be living in their parent's basement," Graham said. "They're lonely, they're isolated."

Zack Mabel, a research professor at Georgetown University, theorizes that falling labor force participation among young men could impact the economy for at least several decades.

"At this point, it's a long trend over the course of multiple decades that does not appear to be improving, and could have real long-term consequences," he said.

The economy appears to already be feeling the decline in male workforce participation. Despite a small post-pandemic rebound, US GDP per employee fell 1% in 2022, the first decline seen since the World Bank began recording productivity data over 30 years ago.

The overall labor force participation rate, meanwhile, has slumped to 62%. Besides the years following the pandemic, US workforce participation rate hasn't been that low since the 70s, World Bank date shows.

"In a situation where you have millions of men … foregoing college, and as a result are less productive and less able to hold onto a stable job, yes, that certainly would raise concerns our national productivity would suffer as a result," Mabel said.

With men working less, they may be less interested in starting families, and this trend could weigh on household formation.

42% of men who have exited the workforce live with at least one parent, a 2017 Brookings study found.

"This is such a seismic shift in the social structure," she told Business Insider. "It's hard to say how long it lasts."

Men who have dropped out of the workforce, for one, are significantly more likely to suffer from opioid addiction, Graham said. 44% of men who were out of the workforce said they needed to take pain medication -- more than double the portion recorded in employed men, where just 20% took pain meds, a separate Brookings study found.


11% of men who have exited the labor force rely entirely on government welfare programs for income, according to Brookings data.

"They cost the health system. They go to the emergency room and they're sick, they're not going to be able to pay the bills," Graham said. "That's coming out of somewhere."

The welfare burden is exacerbated by the fact that unemployed men aren't contributing to benefit programs such as through Social Security taxes.

"Potentially, more and more people would benefit and depend on resources that we don't actually have the means to provide ... And that then would really present itself as a huge societal conundrum," Mabel warned.

There's no clear answer for how to get young men back into the workforce. The causes appear to be multifold -- disabilities, incarceration, and wages not being enticing enough, to name a few.


Obviously this is all a reflection of the economy, in my opinion.
Some may try to argue there are cultural causes.




Update June 2024:
It looks like there has been an uptick in the teen employment level (a 14-year high as of March 2024) which could be taken as a good indicator.
Following a decline, the labor participation rate for 16 to 19-year-olds reached a 14-year high in March 2024 at a rate of 38.2%, according to the Bureau of Labor Statistics.
However, this is still not as high the levels in the 80s and 90s, which were in the 60% percent range.

I think we should still remain cautious, however, since much of this could just be due to the higher number of immigrant families, or more poor families where there is more pressure for their children to start working at an earlier age, and who are often not headed to college, so there is less academic pressure to succeed in high school.

source: Teens are 'seeing opportunities' as declining employment trend reverses: 'Generations' author, Agustin Hays, FOX Business News, June 2, 2024

I looked at a graph and it does look like the teen employment levels has been slowly increasing since hitting a low in July 2010.
The teen employment rate was highest in August 1978.
In April 2000, the number of employed teens was 7.4 million. By July 2010 that number was down 47.7% to 4.3 million.

source: Federal Reserve of St Louis, Employment Level - 16-19 Yrs. data

[Billy_Bob Patriot Master]

The latest generation coming into the work force has been told they do not have to produce but should expect everything handed to them. The great society lie that democrats have been spouting for 60 years. Now reality is slapping them hard, they do not know how to react because they have been lied to for so long.

[pollycy]

The latest generation coming into the work force has been told they do not have to produce but should expect everything handed to them. The great society lie that democrats have been spouting for 60 years. Now reality is slapping them hard, they do not know how to react because they have been lied to for so long.

Well, the big government welfare "gravy train" that's mostly been rolling merrily along since Obama may be about to grind to a halt very soon.  Trump's coming back with a vengeance and it's unlikely that he's going to get a reputation as someone who shovels out welfare to every bum who wants it. 

Frankie Roosevelt, the great Democrat demi-god, invented the modern American welfare machine.  It was expanded greatly by Frankie's star-pupil, Lyndon Johnson.  And then, of course, the crown jewel of socialized medicine arrived with Barack Hussein Obama.  While it's likely that we're stuck with all these programs, services, and other giveaways that Democrats use to buy votes, it would be hoped that Trump will see to it that these welfare pipelines are choked-off to the point of strangulation.  A country full of welfare-sucking parasites can never be "great again".