An earlier editorial by my colleague noted that right-wing apoplexy over the labor force participation rate is unfounded.  On that, he is correct:  the rate fell just 0.1% in the previous month, but it still shows a 0.2% increase since Biden’s inauguration in January.  But we’re giving too much credit to the right-wing trolls who exclaim that this is a legitimate point of concern.

The big thing countering the right-wing breast-beating:  Trump entered office with a LFPR at 62.8%; it peaked during his term in January 2020 at 63.4%, a little more than a half point higher.  And due to his mishandling of the pandemic, it fell to 61.4% when he left office.  They didn’t seem that concerned then that Trump did nothing to significantly increase the rate, and they certainly didn’t care that it tanked on his watch.  And student workforce participation is actually higher now (36.3%) than at any time during the Trump administration.  So they’re just bitching to bitch, which is what they do best.

Let’s get some concepts clear before we continue.  The Labor Force Participation Rate is the percentage of the US population over the age of 16-years-old who are either employed or looking for work.  They’re the group that wants to have a job.  Retired people and the handicapped/physically unable to work are the majority of people who account for the non-participation percentage.

The LFPR peaked most recently in 2006 with 66.4% of the population having or looking for a job, and this is not surprising to people who watch demographics:  2006 was the first year the first line of Baby Boomers started to drop out of the workforce en masse.  It’s literally been predicted for decades, based on vital statistics, that there would be a significant drop in labor participation rates now, as Boomers retired and smaller generations of workers entered the workforce.

The three other major issues impacting the LFPR are structural, and they have nothing to do with people dropping out of the labor force to deal drugs.

The first is how someone is classified in the data set.  Since the Great Recession, more workers are part of the “gig economy.”  Companies have cut back on hiring W-2 employees and instead brought on 1099 contractors.  From Uber drivers to contract workers to landscapers, people are not seeking formal employment and instead are working on their own schedules for themselves.  They fall into a grey area of the calculation:  they’re earning a living (however meek), but they’re not on anyone’s payroll.

This is a flaw in data collection that has been known but has been exacerbated in the last decade-plus:  how to count people who are not actively looking for a job but who are working regularly and sporadically.  And it runs across the demographic spectrum; young workers and old are DoorDash drivers, while semi-retired people may pick up a contract when they want to supplement their incomes.

The second issue is one of career change.  One of the largest job sectors in the US, hospitality workers, saw four million jobs lost during the pandemic.  Some were nominally still employed by a hotel or restaurant, but they were getting no hours and no benefits.  While those jobs are opening back up again, the workers have moved on.  They’re going back to school to train for other, more stable jobs.  They’re getting real estate licenses.  Or they’re dropping out of the job market to stay at home until the industry stabilizes.

Wages play a big decision in many of these people changing jobs.  Hotel, restaurant and many other hospitality workers are paid on an hourly basis.  If they’re only working 10-20 per week at a job paying $20 an hour that was giving them 40 hours prior to the pandemic, it doesn’t make sense for them to stay.

The final factor is the most personal:  happiness.  During the pandemic, millions of Americans enjoyed being able to stay at home with their families.  With day care costing as much as $15,000 per child per year, they found working a job that paid $25 per hour (or $50,000 per year) wasn’t as rewarding as staying at home, taking care of their families, and forgoing the net $10,000 or $15,000 they were making.  Biden’s monthly child tax credit has softened the financial blow, so it’s more feasible having only one working spouse.

[An aside:  it seems odd that conservatives would be complaining about this, given their sermons about “traditional families” where one parent (typically the male) is the breadwinner and the other (the female) stays home to care for the children.  Now that it’s happening, they’re decrying it.]

Let’s leave this with two lessons:  first, conservatives are going to bitch about anything they can, but rarely is it based in reality.  And second, we’re in a new economic era where previously used metrics don’t necessarily reflect the reality on the ground.  Let’s not give momentary variations too much weight.