Category Archives: labour force participation

19/3/18: Drivers of the low labor force participation rate: U.S. data since 2001

Why doesn't U.S. economic expansion 'feel' like an economy is at full employment? Because of the low participation rate that has effectively reduced unemployment to superficially low levels without creating sufficient amount of quality jobs to offset the rise in working age population since the end of the Great Recession.

Here is a chart, via @ernietyedeschi, showing that the U.S. economic expansion has only recently started reducing the sticky non-participation drivers that remain in play since 2001:

The above is a fundamental problem for a range of advanced economies, not just the U.S. as I have noted in a number of previous posts, as well as a factor related to the secular stagnation thesis on both, demographic side (demand side secular stagnation) and technology / wages side (supply side secular stagnation).

27/7/17: The Gen-Lost is still lost…

Today, Marketwatch reported on a research note from Spencer Hill of Goldman Sachs Research claiming that the young workers cohorts in the U.S. have now caught up in terms of employment with older workers' cohorts.

Sadly, the argument is based on highly flawed analysis. The core data presented in support of this thesis is the unemployment rate, as shown in the chart below:

But official unemployment figures mask massive decline in younger cohorts' labor force participation rates, as evidence in this chart from Peterson Institute for International Economics:

In simple terms, when you reduce your employment base by moving people into 'out of workforce' category, you lower unemployment rate.  This is supported by other research, e.g. as reported here: Skewed, against the Millennials, workplace conditions are also to be blamed: or as highlighted in these data:


So, no, beyond superficially deflated official unemployment metric, there is no evidence of the labor force conditions recovery for the younger workers. The Generation Lost is still lost. And that is before we consider the life cycle effects of the crisis.

17/7/17: New Study Confirms Parts of Secular Stagnation Thesis

For some years I have been writing about the phenomena of the twin secular stagnations (see here: And just as long as I have been writing about it, there have been analysts disputing the view that the U.S. (and global) economy is in the midst of a structural growth slowdown.

A recent NBER paper (see here clearly confirms several sub-theses of the twin secular stagnations hypothesis, namely that the current slowdown is

  1. Non-cyclical (extend to prior to the Global Financial Crisis);
  2. Attributable to "the slow growth of total factor productivity" 
  3. And also attributable to "the decline in labor force participation".