March 9, 2013
CORRECTIONS AREN'T CRISES:
And yet the labor force participation rate is still falling (Tyler Cowen, March 9, 2013, Marginal Revolution)
By the way, my point is not to deny the "good news" aspects of the report, as summarized by Matthews and discussed elsewhere. I would instead put it this way: we are recovering OK from the AD crisis, but the structural problems in the labor market are getting worse.
On the other hand, if you simply extend the employment participation graph back a few decades you could come to the conclusion that the structural problem with employment is being repaired.
Arguably, the high participation rates we had for thirty years were just a function of adding women and minorities to the workforce for political reasons, rather than economic ones. Since the white men hiring them weren't about to give up their own jobs to do so, we merely ended up with massive numbers of makework jobs.
A generation later, and thanks to that integration, white men no longer enjoy that exclusive power so their own jobs are open to everyone and boondoggles are being shed. Thus employment participation is returning to the historical norm.
The bigger question becomes, given that computers, robots, and free trade all should have been driving employment participation lower during the past several decades, is there any reason to believe the number will stabilize at the historical norm? Shouldn't it be far lower than that?
Posted by Orrin Judd at March 9, 2013 9:10 AM