Monday, September 9, 2013

The U.S. Labor Force Participation Rate Plunges To 1978 Levels

The labor force participation rate in the U.S. fell in August to the lowest level since 1978, a development that may reflect the lack of higher-paying jobs in the economy. 
Participation in the workforce has trended down steadily since early 2008, near the start of the recession, and fell last month to 63.2%. 
A number of factors are driving the trend, including an aging population, women no longer entering the labor force at increasing rates and a growing fraction of those with college educations not working.
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People in all those groups may not be able to find jobs that pay enough to entice them to work rather than pursue other options, be it early retirement, raising children or returning to school. 
“At the margin, people are saying the reward is not worth the effort, and focusing on other things,” said John Silvia, chief economist at Wells Fargo. 
The biggest long-term driver of the downward trend is women’s participation. From World War II until the early 2000s, the fraction of women working grew steadily. Then the rate leveled off, but didn’t begin to fall significantly until after the recession ended in June 2009.
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