Brad Plumer has an interesting piece about three reasons why fewer workers are actually working, using the labor force participation ratio as a backdrop. He’s on to something, but misses the mark because he fails to ask two fundamental questions: 1) if the workers are giving up looking for work, then what are they doing with their time? And 2) is it possible to have more than one cause to a problem?
In answering the first question that was never asked, we can answer the second one:
Here’s a nifty chart by Derek Thompson that shows more than he sees. People who gave up looking for a job have to be doing something with their time, and they’ve been stratified by age.
The interesting part is that the workforce participation rate has been going down overall since 1990, but the rate of those 55 and over has been going up since 1990. While most, including Plumer and Thompson have been ignoring this as insignificant, if I told you that workers over 55 have made a jump of 15% in re-entering the workforce since 1990, you’d probably say that was significant.
So we know what the older people are doing – they’re going back to work. The reasons are many. What about the younger than 55 crowd? Here’s another Thompson chart that shows something else pretty stark – women leaving the workforce make up HALF of all of those leaving the workforce, and it kind of makes sense since the 1980s:
We could be sexist and say that women are staying home to take care of children (which some economists have assumed), or we could go knocking door-to-door and ask what people are doing with their spare time; or we can use the data from the people who have already done that.
One of the places I’d be looking, because people have done this in the past, is Higher Education. According to the National Center for Education Statistics, colleges and universities nationally have seen an average 24% increase in student enrollment age 39 and over since the recession began – 60% of them are women. This is significant!
This is worth considering. After all, 4% of the workforce has given up, while the colleges have enjoyed a 24% older-student surge.
In answering the question of what are all of these doom-and-gloomers who gave up looking for a job doing, we find that there is more at play here than meets the eye; and as such, there are many causes to labor force dropout rate.