US currently has record low labor participation figures

President Barack Obama

Obama can rightly boast that the US economy has been doing relatively well lately. The official unemployment rate has gone from 5.7 percent in January to just 5.5 percent in February. This is the lowest rate since the Spring of 2008. At the same time several US stock market indices have reached record highs.Compared to many other advanced economies, especially those in Europe, the US is doing relatively well. There has also been good growth in the number of jobs with 295,000 new jobs in February.However, there is one area in which the US figures are poor and that is participation in the labor market.
  
The Bureau of Labor Statistics(BLS) issued data that shows in February of this year, 92,898,000 Americans 16 and older did not participate in the labor force. Since April of last year to the end of February this year the participation rate has ranged between 62.9 percent and 62.7 percent. Such low rates of participation last happened way back in 1978 in March when it was the same as February this year, 62.8 percent.

When Obama became president in January of 2009 there were 80,529,000 Americans who did not participate in the work force but since then 12,269,000 have left the workforce. Just in February alone when unemployment figures fell, 354,000 left the workforce. The CEO of Gallup recently described official unemployment figures as "extremely misleading". Job hunters who did not look for work in the four weeks that precede an unemployment survey will not count as unemployed. Also, if you are employed just an hour a week and paid at least 20 dollars you will be listed as employed. 

The participation rate is particularly poor for women. In February of this year a record 56,023,000 women sixteen and over were not in the work force. This was a record high and the first time that the number was in excess of 56 million. In January the figure was 55,756,000 and so there must have been 267,000 who left the labor force over the month. During the last year the female participation rate has ranged from 56.6 to 57.2, but in February of this year it was 56.7 at the low end of the range. One reason for the lower participation rate in general is the aging of the baby-boom generation who are now reaching the 55 and above age level which naturally has a much lower participation rate. This may mean a smaller labor force and the need for more immigration. However, part of the explanation of lower participation rates may be discouraged workers or some women or men may decide that they want to spend their time parenting rather than in the labor force.

Many studies show that lower participation rates are associated with those in lower income groups. However a recent study by Robert Hall with co-author Nicolas Petrosky-Nadeau found that men between 35 to 59 in families with less than the median income had a higher participation rate than those above the median income. They found the same pattern for women. Different studies arrive at conflicting views depending upon the data set used for their analysis. While some may not be working because they do not want to,  many others may not be participating because they have given up on looking for work. Official unemployment figures not only are misleading but tell us nothing about this problem.

Sources
http://dailysignal.com/2015/02/28/labor-force-participation-working-less/
http://cnsnews.com/news/article/ali-meyer/56023000-record-number-women-not-labor-force
http://www.hngn.com/articles/75449/20150307/record-high-number-of-americans-not-participating-in-labor-force.htm

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