Prime age labor force participation: disability and homemaking decline

Prime age labor force participation: disability and homemaking decline

About a year ago I wrote a series of posts on various reasons for the relatively low labor force participation by prime age individuals, and its effect on wages; In my post summing up that study I wrote:

A major element of the participation rate is comparison with other alternatives to being in the labor force.

Two alternatives to labor participation appear to have had a significant effect on the rate.

First, the cost of child care, which has soared over the last 15 years, compared with subdued (or paltry) wage growth has caused many women and some men as well in the prime age demographic to leave the labor force completely and instead raise their children as homemakers.

A second alternative, which appears to be a major determinant of the decline in male participation at least over the last 60 years is the expansion of disability insurance. This increase in disability has been mainly due to neck and back conditions, and together with improved longevity, has increased the incidence of long-term disability dramatically.

It has also been suggested that the huge increase in the incarceration rate from roughly 1980 through 2000 has also played an important role in depressing participation.

I bring this up again because a few days ago the NY Times published a very interesting graph depicting the trends in the percentage of prime age individuals who report that they are not in the labor force due to homemaking, disability, discouragement, being in school, and “other,” which presumably includes incarceration:

Further, one important reason for the decline in disability is simply that the large Boomer generation is aging out: in 21 months the last Boomer will have turned 55. This will mean that the younger half of the prime age demographic, roughly, will be the even larger Millennial contingent, while the presumably less healthy older half will roughly consist of the “baby bust,” a/k/a Gen Xers, a point referenced by the Times:

The data shows that the decline has come almost entirely from the older half of the prime age population.

As Spock might say, “fascinating.”