The Shrinking Workforce: You Read it Here First

jobs marketA funny thing happened on the way to the labor market.  The unemployment rate fell last month to 7.6%, but the labor force participation rate fell to 63.3%, the lowest in about 34 years.  The LFPR is reported monthly by the Bureau of Labor Statistics but it has not received much attention until recently.   So while the unemployment rate has been hailed as an Obama success, it hides a dirty little secret, which I pointed out as early as last summer.  Perhaps now the problem of a shrinking work force, coupled with rising disability rolls, will get the attention it so desperately needs.


Comments (10)

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  1. Espy says:

    Pamela, how dare you disillusion the unwashed masses!

  2. Neil says:

    Its amazing how this hasn’t received more national discussion. The declining workforce is a terrible problem.

  3. Devon Herrick says:

    This is interesting. The unemployment rate is falling, but so is labor market participation. To some degree, the unemployment rate reflects a shortage of workers for many of the highly specialized jobs available. This is what many call structural unemployment. Jobs go unfilled from lack of qualified applicants all the while large segments of the population cannot find a job. The good ol’ days when Rust Belt industries paid high wages for jobs any able-bodied man could perform are long gone.

  4. Patel says:

    Why is there shrinking workforce, are they all retiring or living on disability checks? If so, that would suck, and should be treated as a major public issue.

  5. Kendall Christianson IV says:


    I believe it is because people are sitting out the job market. Going back to school is probably a popular thing for older americans to do while they wait for the job market to turn around. No need in accepting a job that your overqualified for if you can go back to school and learn a new skill.

  6. Andrew says:

    I read about this last week and thought it was interesting, indeed. Structural unemployment is becoming an increasingly concerning problem in our labor market and I hope we start producing more skilled laborers if we want to stand a chance to continue competing with other developed and emerging markets.

  7. Patel says:

    How did labor force participation drop by so much, what is the precise break down? Was it mostly people reaching their retirement age or increasing disability or did people just give up looking for jobs?

  8. Andrew says:

    @Patel: I believe that this time labor force participation declined so much due to a large portion of people deciding not to seek employment any longer.

  9. Gabriel Odom says:

    Yes, LFPR is the ratio of non-disabled adults (18-65 years) who choose not to work to those who do work.

  10. Paket says:

    As oppose to getting disability checks we should provide resources to get the training to transition into another line of work. That way they are still productive. The current system is just unsustainable.