The New York Federal Reserve released a paper recently that
has caused a lot of talk and confusion. The paper reports that the US job
market is actually at a great place now and is where it actually should
be.
Labor force
participation has fallen and is stilling falling and the biggest drop was after
the recession, and the paper said that the main reason for the labor force
participation rate not being where we want it to be is because of the baby
boomers retiring. However many argue that it can’t be the only cause.
The paper also says some charts can misleading
and not show the whole picture in particular the Civilian Employment-Population
Ratio. They believe it is misleading
because it does not include the baby boomers retiring. So a new chart was produced
and this chart shows that many people were working before the recession and now
they are all retiring.
Many don’t
agree with what this paper said. A main argument against this was that they
don’t look at the younger generation in the work force. The younger generation
participation in the labor force has actually shrunk while the baby boomers
have much more participation.
http://www.huffingtonpost.com/2014/02/04/new-york-fed-labor-market_n_4723769.html?utm_hp_ref=business
While baby boomers leaving the labor force isn't the only reason the labor force is shrinking, it still has to be a decent portion considering just how many people are approaching retirement age. As long as the labor force participation rate isn't dropping at a rate that is completely unheard of I don't think it should be a major concern.
ReplyDeleteI disagree with Brooks that this is not a major concern. As more people are not participating in the labor force, they will fail to be competitive in the job market. When people in this younger generation fail to avoid the unemployment rate longer than 6 months, their chances of obtaining a proper job will dramatically decrease. This may cause a lot of people who cannot properly contribute to our economy and stay competitive in the labor force. If the labor force participation rate for younger people is dropping, then we are going to have a younger workforce that may not have the necessary skills and experience to replace the retiring workers in the older generations.
ReplyDeleteThe lower labor force participation rate among young folks like us should be the best news you've heard in a while, Matt. The labor market is competitive and the less guys there are out there chasing the deals, the more we get. So while it may not be the best news for the economy, I'm fine with it.
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