Monday, April 4, 2011
Idle (Worker) Musings
Here is a graph of labor force participation.
A layman's thoughts:
- Participation in the 20-24 bracket has declined throughout the decade, and the first reaction of many pundits is to blame higher college/graduate school enrollment. The quickest data I could find (from the Council of Graduate Schools) lists 463,000 students enrolled as of 2009. Some quick back of the envelope math (300 million people times 1/16th of the population between 20 and 24 = 18.8 million people in this cohort) shows that it would take a HUGE increase in the number of graduate students to have even a 5% effect on this number. Graduate school enrollment would have to increase by 200% to drive an effect this large.
- Teenagers have participated at a lower and lower rate. I don't have any good data to support this, but I don't think this decrease is a result of lower participation due to the disappearance of minimum wage jobs. I think this decrease is due to teenagers of upper-middle class families being disincentivized to work as minimum wage has decreased in real terms while top quartile incomes have continued to increase. Affluent parents are more able to fund their children's volunteer summer and science camps, and the academic arms race gives no value to a student's high school work experience.
- Americans in the prime of their working life continue to participate at almost exactly the same rate, which tells me that the "discouraged worker" profile is far more likely to be an older worker or a teenager.
- Finally, there is the rapid rise in the participation of older workers. Economists have proposed a number of reasons for this, but my own unsupported opinion is that boomers have not seen their investment portfolio grow in the last decade, and therefore have stayed in the workforce. Ignoring dividends, the DJI average has declined 17% in inflation-adjusted terms since 1996. There's a lot of liberal empathy for the aging janitor/construction worker who has to stay in the field to bridge the gap between working life and social security, but in my own family's experience, low wage workers don't see a very big marginal decline in their living standard after moving from a low-wage job to social security.
Labels: Waiting for our bosses to die
¶ 5:57 AM
