The incredible shrinking labor force
A banner reading 'Jobs' hangs on thre facade of the U.S. Chamber of Commerce in Washington.
The big issue is how to get the labor force back to work, right? That's what the President's speech before Congress is focused on: how and where to create jobs by using billions of dollars of what we used to call stimulus spending.
That's not how the Peterson Institute's, Howard Rosen sees it. For him, the biggest issue is the fact that the labor force is shrinking before our very eyes.
"Long periods of unemployment are causing people to stop looking for work and drop out of the labor market or not enter the labor market at all," he told the Marketplace Index today. "Although the working age population increased by 3.8 million between August 2009 and August 2011, the size of the labor force declined by 768,000 over the last 2 years. The number of people who no longer consider themselves attached to the labor force increased by 4.5 million over the last 2 years."
That's right, the population of the U.S. is rising faster than the size of the workforce.
Rosen drew his conclusions from analysis of data from the Bureau of Labor Statistics. He theorizes that some people are retiring early - rather than try an increasingly unfruitful job search. There's also evidence that some people are turning to long-term disability. And it's possible that young people, seeing poor job prospects, are staying in school longer.
Rosen says: "Over the last 50 years, the US economy's ability to create enough jobs to absorb a growing pool of people available, able and willing to work was the envy of the world."
But that relationship is breaking down. What all this means according to Rosen is that the U.S. employment problem isn't just a matter of digging out of the short-term hole left by the recession. Instead he says that the U.S. is going through a "watershed change in not only the labor market, but how our entire economy operates."
The U.S. has to deal with this problem not later, but right now.