Here is something interesting I found in an article by staffers at the Kansas City Fed a couple of weeks ago.
They broke down the 25-54 prime age labor force participation group for men into 10 year slices, by education, and by reason for not participating in the labor force. They focused on men, because including women confounds the results by the secular societal change whereby women entered the labor force en masse between the 1960s and 1990s.
First of all, it turns out that the prime decade driving the increase in non-participation is the 25-34 age group:
That finding is amplified by breaking down each prime age decade by education level:
Across all age levels, the biggest jumps by far in non-participation were among those with high school degrees and some college, and especially so among the youngest decade.
Next, they broke down non-participants by the reason given for non-participation, using the monthly household survey that is issued as part of the jobs report. The Census Bureau asks non-participants if the reason they are not in the labor force is disability, family care, education, retirement, or other:
In accord with the above, among the 25-34 age group, the biggest jump in the reason for non-participation was education. Interestingly, among the 35-44 and 45-54 age groups, the big increases were family care and retirement(!). The rate of those claiming disability actually decreased (a big surprise). These increases were similar across all levels of educational attainment.
I have two takeaways from this: first, there is likely an “education arms race” going on, where ever-increasing levels of education are deemed necessary in the competition to obtain good-paying jobs. Seventy-five years ago, a high school degree is what was necessary. Forty years ago it was a college degree. Now it may take a graduate degree. Ultimately this is a self-defeating waste of resources, and worth its own lengthy article.
Second, this is evidence for the “child care cost crunch” I wrote about several years ago. As the cost of daycare has increased, and wage growth has decreased, an increasing share of households are finding that it makes more sense for one spouse — in this case, “Mr. Mom’s” — to stay home and raise the kids.
Fewer people in all age groups are disabled. Are we safer, or is it harder to meet the qualifications?
The highest change in 35-44 and the second highest in 25-34 is retired. Are there that many more men who have saved enough? Are there more who are unable to realize they have not saved enough? Is it just an easy thing to say? (When it took me 8 months to find a job in 2014 I was trying to figure out if I could live on what I had saved. I had started to say I was retired when an opportunity presented.)
I’m 53 and stopped working voluntarily four years ago because workplaces in America suck royally. We claim to be “free” in this idiot country, yet spend half our waking hours beings bossed around by little tinpot dictators and incompetent fools, scared to death we’ll lose the stupid, pointless jobs we thoroughly hate but are too scared to quit. The whole rotten system can’t collapse quickly enough.
“an increasing share of households are finding that it makes more sense for one spouse — in this case, “Mr. Mom’s” — to stay home and raise the kids.”
Even if it consumes most of one salary to pay for day care, that spouse stays employed, which means that when day care is no longer required, the take-home pay increases and the person has a good employment history. Furthermore, that partner is still paying into SS.
I recently returned to working at a biotech company that I had started at in 1999. Back then, all of the sales people had a BS or occasionally an MS degree. Today, just about everyone has a PhD.
That disability percentage is a percent of those not participating. Those not participating due to disability may not have actually declined as a percentage of the population, or not as much as those numbers suggest, but the other categories have grown faster. Many retirements before 65 or more are at least partly involuntary: no reasonably comparable job possible after a layoff. Some child care and education decisions might go differently if decent jobs were readily available.
Look at the millions who crawled out of the woodwork the the late 1990s in numbers not predictable from the standard statistics available. In other words, as too many pieces of data besides the official unemployment rate (and some others) suggest, there is still a lot of slack that could absorb a lot of people who would really like to have a good job. Also look at other advanced Western countries. The U.S. stagnation on participation rates is not seen in those countries. And finally, look at the very sluggish growth of full-time employment in the last two decades. We still have a long way to go. We can’t start a massive infrastructure modernization too soon to create real demand for labor.