A blog post by Pedro Nicolaci da Costa in the Wall Street Journal highlights findings from a paper from the Federal Reserve Bank of Philadelphia that much of the shrinking of the U.S. workforce has been due to workers retiring early, and that given that people who retire early are less likely to reenter the labor force when job opportunities improve, improving economic conditions may not draw these workers back in.
I’ve looked at the breakdown by age of the 5.6 million “missing workers”—potential workers who, because of weak job opportunities in the aftermath of the Great Recession, are neither employed nor actively seeking work. More than three-quarters of missing workers are under age 55 and are therefore unlikely to be early retirees. That means that even if all of the missing workers age 55 and over are early retirees who will never reenter the labor force no matter how strong job opportunities are (a very strong assumption), that still leaves 4.3 million missing workers under the age of 55 who are likely to re-enter the labor force when job opportunities strengthen. In other words, weak labor force participation rate remains a key component of the total slack in the labor market.
Roughly half of missing workers are of prime working age: Missing workers,* by age and gender, July 2014
|Men under 25||630,000|
|Women under 25||420,000|
* Potential workers who, due to weak job opportunities, are neither employed nor actively seeking work
Source: EPI analysis of Mitra Toossi, “Labor Force Projections to 2016: More Workers in Their Golden Years,” Bureau of Labor Statistics Monthly Labor Review, November 2007; and Current Population Survey public data series