NCPA - National Center for Policy Analysis

Labor Force Continues to Shrink

October 9, 2014

The September jobs report indicated the creation of 248,000 new jobs, a positive sign for our struggling economy. But Stephen Moore, chief economist at the Heritage Foundation, offers a stunning figure that wasn't touted in the recent jobs report: a net 100,000 workers dropped out of the labor force entirely last month.

Are the 100,000 dropouts all discouraged workers? A number of them are baby boomers choosing to retire, explains Moore, but a large portion are Americans who have lost hope of finding work again. He explains how the labor market has changed since the Great Recession:

  • The percentage of working-age Americans in the U.S. labor force (the labor force is defined as those currently working or who are looking for work) is 3 percentage points lower today than it was in January 2009.
  • The 62.7 percent labor force participation rate is the lowest rate the United States has seen since 1978.
  • What this means is that the labor force has 7.4 million fewer workers than it would otherwise have had.

America's 5.9 percent unemployment rate, Moore explains, is largely a product of its shrinking labor force, as many who would typically be counted as "unemployed" have instead given up on finding work (and are, therefore, no longer part of the unemployment rate calculation).

And Moore points out another problem with the jobs that have been created: they are low-wage jobs, not up to par with the jobs that were lost during the recession.

Source: Stephen Moore, "Under Obama: One Million More Americans Have Dropped Out Of Work Force than Have Found a Job," Heritage Foundation, October 7, 2014.

 

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