Econintersect: The labor participation rate (percentage of working age Americans in the labor force) peaked around 2000. The decline accelerated after the Great Recession. From he peak in 2000 to the official end of the Great Recession (June 2009) the participation rate dropped from 67.2% to 65.8%, approximately o.2% per year. Since the end of the recession the decline has steepened, taking the rate down to 62.9% by the end of 2013, a drop approximately 0.6% per year.
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An analysis of this phenomenon has been carried out by Shigeru Fujita, Federal Reserve Bank of Philadelphia. Fujita’s analysis concludes that there may have been an underlying cyclical pattern to the decline in the labor force since 2000, but since the summer of 2009 the sharp rise in the contributions from retirements accounts for the dramatic increased rate of decline in the labor force participation rate. He says this is “clearly affected by cyclical factors, but this decision is unlikely to be reversed.”
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Source:
- On the Causes of Declines in the Labor Force Participation Rate (Shigeru Fujita, Federal Reserve Bank of Phiadelphia, 06 February 2014)
