Some experts believe the decline in workforce participation is the legacy of the Great Recession and that it will improve. That rate is only 63.2%; it was nearly 67% in 1990.
But structural changes are plainly at work too, based in part on slower-moving demographic factors. A 2012 study by economists at the Federal Reserve Bank of Chicago estimated that about one-quarter of the decline in labor-force participation since the start of the Great Recession can be traced to retirements. Other economists have attributed about half of the drop to the aging of baby boomers.
Baby boomers can’t be the whole story, though, since the participation rate has declined for younger workers too. This part of the drop is a function of various factors, including simple discouragement, poor work incentives created by public policies, inadequate schooling and training, and a greater propensity to seek disability insurance. Globalization and technological change have also reduced employment and wage growth for low-skilled workers—which raises questions about whether current policy is focused enough on helping workers to achieve the skills necessary to work productively and earn decent incomes. Excerpt from WSJ 4-5-14
I think I said something like this before, we are focused on the wrong things. That is, we pat ourselves on the back at the growing numbers of participants in government programs for the poor and low income (programs that make not working more comfortable for those so inclined) when we should delight in increasing the employment and employment participation rate and work toward that goal. What good does it do to hype raising the minimum age when 37% of the adult workforce has stopped looking for work?
I, like most Americans, want more than the basics, mere subsistence in life. However, for some especially low-skilled and poorly educated citizens, going from unemployment to Social Security disability with food stamps and Medicaid and tax credits may be sufficient to stop trying.
As Benjamin Franklin said, “I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it.”
Shouldn’t our focus be not on palliative care, but on correct diagnosis and treatment focused on a cure? Instead we have more programs providing disincentives to work and grow income.
QUINNSCOMMENTARY 