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Home Publications Blogs Beat the Press The Question on People Leaving the Labor Force is 41-Year-Olds, Not 61-Year-Olds

The Question on People Leaving the Labor Force is 41-Year-Olds, Not 61-Year-Olds

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Friday, 06 June 2014 12:54

In his discussion of today's employment report Neil Irwin notes that the unemployment rate is considerably lower than would otherwise be the case because so many people have simply given up looking for work and are therefore not counted as being unemployed. Irwin then adds that the big question is that if the economy eventually recovers is:

"How many of the 61-year-olds who gave up looking for a job in the last few years are going to return to the labor force when they smell opportunity, and how many have retired for good?"

Actually, the story of people leaving the labor force is not primarily one of older workers who are near retirement age, it is primarily a story of prime age workers. According to data from the OECD, the employment to population ratio for workers between the ages of 25-54 is down by 3.5 percentage points from its pre-recession level. For workers between the ages of 55-64 it is only down by 0.9 percentage points.

It is difficult to envision any obvious reason why people in their prime working years would suddenly decide that they did not want to work other than the weakness of the labor market. Most of these workers will presumably come back into the labor market if they see opportunities for employment.

Comments (3)Add Comment
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written by Vedicculture, June 06, 2014 4:13
Right, but the 25-54 group has been rising at the same level of the past 2 expansions. The key is cohort. With so many people retiring, that means the unemployment rate should be no lower or higher than where it is. Irwin needs to accept this and nod.

Demo is a fact, the economy has made some nice gains adding shitty paying jobs the last year. I suspect June will be another big month and the U-3 will be below 6% by years end and down to 5.5% by early 2015. Americans are powering up their credit cards and Gex X/Y are leading this surge into Tech.

Job growth will continue to accelerate until the credit is exhausted.
Thanks, Dean, for the catch.
written by JohnT, June 07, 2014 9:12
Nothing to add, but thanks for catching the reporter's misleading remark.
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written by dax, June 09, 2014 7:13
"the employment to population ratio for workers between the ages of 25-54 is down by 3.5 percentage points from its pre-recession level. For workers between the ages of 55-64 it is only down by 0.9 percentage points."

Why are people saying the decrease in the participation rate is mostly demographics, i.e. an aging workforce, as in here:

http://economix.blogs.nytimes.com/2014/02/04/evaporating-unemployment/

They're wrong? I'm misunderstanding something?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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