Friday, April 5, 2013

Why the Labor Force Participation Rate might be falling. Where has everyone gone???

Lots of talk about why the "Labor Force Participation Rate" in the US decreased last month by almost 500,000 people. The 2 schools are thought are, (1) people are giving up looking for work and/or collecting disability compensation instead, (2) due to demographic shifts more people are retiring.

Below I crudely copied and pasted the latest beneficiary data from the Social Security Administration that shows the number of awards granted for benefits in March and February for (1) people eligible for Social Security benefits and (2) people eligible for Federal disability compensation.

The number of additional "Retired Workers" compared to February barely budged, as did total OASI awards (blue arrows)

More significant movement in "DI Trust Fund" activity (red arrows), however, as approx 21,000 additional people compared to February were awarded disability benefits.

Not enough, I don't think, to move the needle on the "leaving to retire" reason. There is some evidence that people moving to disability compensation and are no longer counted in the unemployment statistic. 

That leaves a lot of people unaccounted for the gap in the participation rate. 
Source:  Go to the SSA website to make your own custom graphs/charts
View My Stats