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The decline in prime age labor force participation: the smoking gun (part 2 of 2); comparing June Cleaver and Roseanne Conner

– by New Deal democrat

Part 1

The decline in prime age labor force participation: the smoking gun (part 2 of 2); comparing June Cleaver and Roseanne Conner

I recently wrote about the compelling evidence that the biggest reason for the decline in the prime working age labor participation rate was the “child care cost crunch,” i.e., the increase in the number of second-earner spouses who decided to stay at home and raise their children, occasioned by the particularly significant decline in wages among lower quintile jobs, together with the soaring costs of outside day care.
In my post yesterday, I showed that the biggest reason why the percentage of both mothers and fathers of minor children who have dropped out of the labor force has increased, is in order to care for their children — not discouragement, not disability, not education, and not any other reason.

But that is not the end of the story, even though over 80% of men and women eventually become parents of minor children.  In particular, there are other studies which put the spotlight on an increase in disability claims.  In particular, the Atlanta Fed went to the trouble of decomposing the monthly data as to why people aren’t in the labor force over the last 16 years.  The graphs are interactive, and illuminating.

To cut to the chase, the Atlanta Fed found that the single biggest reason for the increase in labor force non-participation was disability claims:

A similar graph was compiled in a separate report:

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Senator, You’re No John Kennedy. You’re Just Clumsily Appropriating a Campaign Line of His.*

Marco Rubio spoke today to a large group of Iowa Republican activists and urged them to “turn the page on outdated leaders of both parties“. They agreed to do that, and started chanting “Feel the Bern.”

Returning to 1920s economic and social policies—which, point by point by point, actually is what he wants to do—is indated leadership, according to Rubio.  Or else he thinks that policies don’t matter; only the age of the candidate does.

I’m guessing it’s the latter. Rubio is 44 and probably would support a 43-year-old Communist Workers Party candidate if one were to run, and step down himself as a candidate.


*CLARIFICATION: I want to make clear that the JFK campaign line I’m referring to was not from Kennedy’s presidential campaign.  I was from his 1946 campaign for Congress.  The actual slogan was: “A new generation offers a leader.”  Kennedy, 29 years old at the time of the general election, based his campaign largely upon his experience as captain of his PT boat that was hit by a torpedo, and his rescue of (I believe) two injured crew members although he himself was injured.

Obviously, given the types of things Rubio used his position as leader of the Florida House of Representatives for, he needed to alter Kennedy’s line somewhat.

Added 11/2 at 12:02 p.m.

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Extending Greenspan’s Remarks on the Equilibrium Real Rate


A fat cat is not in good shape. And feeding it more, will not give it energy to be more athletic.

Greenspan said… “in assessing real rates [of interest], the central issue is their relationship to an equilibrium interest rate, specifically the real rate level that, if maintained, would keep the economy at its production potential over time. Rates persisting above that level, history tells us, tend to be associated with slack, disinflation, and economic stagnation–below that level with eventual resource bottlenecks and rising inflation, which ultimately engenders economic contraction.”

This statement does not go far enough. I will extend it… “below that level leads to resource bottlenecks, sectors of inflation, rising debt, and if the rate stays below for a long time in conjunction with other policies to raise debt, the rate becomes useless against a rising heavy weight of increased debt and socially non-productive investment, especially when labor share is dropping. An even lower rate at that point tries to push debt even higher with disappointing results that look like secular stagnation.”

I see the global economy as flooded with loose monetary policy for too long. Like I wrote elsewhere, the engine of the global economy is flooded by loose monetary policies in the face of large levels of debt, lower effective tax rates on capital and corporations, and falling labor share.  (link to previous post)

In the end, one could conclude that our present low rates are still too high because as Greenspan said, “Rates persisting above that level, history tells us, tend to be associated with slack, disinflation, and economic stagnation.” However, persistently loose global policies in general toward the engine of economic growth combined with falling labor share will produce the same effect over much time.

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