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Mystery solved

Earlyin this story, we learn that economists are confounded by a growing phenomenon:

Most everyone agrees that the graying of America's baby boom generation has exacerbated the problem as larger numbers of boomers near age 65 and opt to retire early. But the erosion of the workforce participation rate since the recession ended in 2009 has exceeded most estimates that took into account the aging boomers.

That's left economists and others to blame the dropout rate on a host of other factors as well: the weak economy, surging attendance in college and adult education, a larger gray market of people working in the shadows, and sweetened federal disability and welfare programs that incentivize recipients not to work.

Economists and others who track labor trends don't quite know what's behind falling workforce participation, which is a national phenomenon as well.

But then we learn that the situation isn't really all that puzzling:

Most everyone agrees that the graying of America's baby boom generation has exacerbated the problem as larger numbers of boomers near age 65 and opt to retire early. But the erosion of the workforce participation rate since the recession ended in 2009 has exceeded most estimates that took into account the aging boomers.

That's left economists and others to blame the dropout rate on a host of other factors as well: the weak economy, surging attendance in college and adult education, a larger gray market of people working in the shadows, and sweetened federal disability and welfare programs that incentivize recipients not to work.

To the weak economy and incentives not to work, add the rapid changes in the nature of employment because of automation and increased productivity, and it should be no surprise that so many people just call it quits. The perverse effect is that, since those out of the work force aren't counted in the unemployment rate, the economy seems to be doing much better than it is, which reduces the pressure to make improvements that could get more people back to work. The "official" unemployment rate is now 6.6. percent. If all those missing workers were counted, it would be 10 percent. Here's the math.

 

Comments

Larry Morris
Tue, 03/04/2014 - 3:21pm

Wow, you even used "exacerbated" correctly ...

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