NCPA - National Center for Policy Analysis

Labor Markets Expanding to Meet Employment Demand

June 25, 1997

Economists say that U.S. labor markets are functioning just as they are supposed to. Low unemployment is creating a demand for more workers, and the workforce is expanding to meet that demand.

Two groups in particular are showing much increased labor force participation: men between the ages of 55 and 64, and women 20-to-24 years old. The first is made up of men who are coming back out of early retirement, while the women are often coming off of welfare -- thanks to state efforts to scale back benefits and reforms passed at the federal level last year.

  • The labor force -- which includes both employed and unemployed workers -- grew by some 2.7 million last year, a 2 percent increase.
  • Excluding the nation's two largest metropolitan areas -- New York and Los Angeles -- May's 4.8 percent unemployment rate would have been 4.5 percent.
  • Economists say that as jobless rates decline to lower and lower levels, new entrants into the labor force -- including discouraged former job-seekers -- pick up dramatically.
  • A Merrill Lynch economist predicts that the labor force will continue to grow at a 1.5 percent annual rate, even though the population is growing at only 1 percent a year.

Companies are benefiting by the trend because older workers usually require less training and their experience tends to make them more productive than their younger colleagues.

Source: Beth Belton, "Hot Economy Taps Deep Labor Pool," USA Today, June 25, 1997.


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