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Business and Labor

The Neglected and Forlorn American Worker

LFPR

Click to enlarge image.

(Analysis) With hiring only still at anemic levels since the onslaught of the 2008-9 recession, many workers have simply given up hope of (ever?) finding a decent job, and they have left the labor force. Comparing a projection of the labor force participation rate from a study done by the BLS in 2002 with the actual participation rates measured since the recession, one finds a widening gap (see chart). Since this study was informed by demographics, the widening gap demonstrates that distinct age cohorts within the population are electing to abandon the labor force at greater rates than before the recession. This calls to mind (unplanned) early retirements, discouraged workers, and outright despair among youth.

Policymakers are sadly ignoring this phenomenon, instead focusing on fiscal sustainability, fears of inflation and high interest rates, and other notions discredited by relevant, realized data since the recession. Rather than directly addressing the failure of the private sector to provide adequate employment of labor, policymakers instead pander ideas like a skills gap to business lobbies, which they use to support allowing more low-wage earning immigrants into the US economy. The private sector is woefully deficient in employing the currently sized US labor force – why should we need to grow the labor force further? This just doesn’t make any sense, unless it’s really about putting more downward pressure on wages

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