Source: JPMorgan |
Furthermore, the "other" pool can be broken down into three categories as well. The "discouraged" workers are therefore not currently the driver of this declining labor force participation. In fact that group shrank in 2013.
Source: JPMorgan |
JPMorgan: - Fujita’s analysis shows that the initial leg down in the LFPR [Labor Force Participation Rate] was due primarily to a sharp rise in discouraged workers and school enrollments (from the "other" category). These categories since have stabilized. The decline in the LFPR from these categories subsequently was reinforced by a trend rise in disability, although this factor, too, now may be leveling off. More recently, an acceleration in retirement has been pushing down the LFPR.
This tells us that the pool of available "discouraged" workers and therefore slack in the US labor markets is not as large as some believe. More importantly, the "discouraged" group is not growing - even as the labor force participation rate continues to fall.
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