Friday, May 6, 2011

Labor Participation Rates - Updated

Look at these trends for civilian labor participation rates from the Bureau for Labor Statistics.  Time period covered is 1948 to 1Q 2011.



Total Population

If the images don't come through, here's a quick description.

Labor force participation rate for both sexes peaked at 67.1 percent in 1997-2000, declining thereafter to a low of 64.7 percent in 2010, bringing participation down to a level last seen in 1985.  When you look only at males, removing the effect of more females joining the workforce over time, the trend is shocking.  Labor force participation has been on a steady decline since 1948, when it stood at 86 percent, to today’s rate of 70.4 percent (1st quarter 2011).  Women’s participation climbed steadily through most of the period from around 33 percent in 1948 to a peak of 60 percent in 1999 and 2000.  Their participation, too, has trailed off slightly since then to 58.3 percent in the first quarter of 2011.

Participation began to drop in 2Q 2001, before the recession and before 9/11.  So what explains this inflection point?  9/11 did not sharpen the drop.  The overall rate remained in the 66 percent range until 4Q 2008 (with one previous dip to 65.9), when it began a steady decline to the current 64 percent.  So the recession sharpened the drop, but did not start the decline.  I need to do more research to come up with plausible explanations, which I'm sure have already been offered.

Here's a chart of compensation per hour increases from Greg Mankiw's blog (see right side menu for a link).  This shows a sharp drop in the rise in compensation per hour starting at around 2000, roughly coinciding with the beginning of the decrease in labor force participation.  What caused the drop-off of wage increases?  Is it related to the change in participation?  Previous inflection points in this chart came when labor force participation was still increasing or steady.


  1. I'm getting non-hyperlinked URLs the GIFs, not GIFs themselves, and the URLs pasted into the browser lead to:

    "As a courtesy, your ISP provided this page because "lns11300000q_241257_1304745231828.gif" does not exist or is unavailable."

    At the risk of asking you to do more work, perhaps lead to the link, or post the GIF, differently? Or, provide a thousand words in place of the picture(s)?


  2. I tried posting the GIFs differently and providing a description. I can't link the original charts because you have to select data to get them so they are ephemeral.

  3. Got it now - thanks. Now to ponder it.