The Phaserl


The drop in the labor force is coming from prime-age Americans, not aging retirees

Examining the 94.6 million Americans not in the labor force.


Those not in the labor force hit a record number in the last month.  While the mainstream press tries to spin it as a retirement trend, the reality is most Americans are too broke to retire.  The Atlanta Fed added some color to explain the big decline in labor force participation.  As it turns out, the decline is coming from structurally problematic areas.  We have many that are in the prime-age category (25 to 54 years of age) that simply say they don’t want a job.  There is also a big jump in those on disability beyond normal population growth.  And finally, we have a larger share of younger Americans going to college and loading up on mega amounts of student debt.  Another contributing factor that is nicely left out is that we have many older Americans continuing to work into old age because as we have mentioned, many older Americans are too broke to retire.  Let us look at the research more closely.

Not in the labor force and not wanting a job

What is probably more troubling about the growth in the “not in the labor force” category is that a big jump has come from those 25 to 54 years of age.  This is the prime 30 year window when Americans typically work.  Yet something is dramatically shifting.  While the labor force participation rate of older Americans is holding steady, the rate of those in the prime-age range has collapsed.

The collapse of the labor force participation rate of those 25 to 54 years of age goes completely against the mainstream narrative.  Take a look at the trend:

LFP Sept_0

The group leading the way lower is coming from the group that should be working.  There is now a deeper attempt to explain this rate decline beyond the party line that Americans are simply getting older and are taking their non-existent retirement nest egg into the sunset.  That is not the case.  Half of elderly Americans would be out on the street without Social Security.

So what is driving the rate lower?

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