Labor force participation has leveled off in recent years as the job market has improved, but it soon will start falling again and not stop for the foreseeable future, the Congressional Budget Office projected Friday.
In a new report, Congress’ in-house budget agency estimated that the labor force participation rate will begin dropping from 63 percent now to near 60 percent in 2028. That would be a return to early 1970s-levels of workforce participation.
The Trump administration has set a goal of boosting the labor force by creating enough jobs and wage growth to tempt people off the sidelines and into the job hunt.
But it is swimming against the tide of demographics. In particular, the ongoing retirement of the Baby Boom generation will weigh down participation, according to the CBO.
Other economic developments also will continue to pull people out of the workforce. One is a rise in people receiving disability benefits. Another is the ongoing decline in marriage, which means fewer men working. Another is the disincentives to work created by Obamacare.
The past few years have seen mostly steady labor force participation. During the wake of the financial crisis, participation plummeted as baby boomers began to retire and many people gave up on the job search because positions were so scare. In more recent years, though, as the unemployment has fallen to near 4 percent, the hot jobs market “has pulled some workers back into the labor force in recent years,” according to CBO economist Joshua Montes.
The good news is that there is still room for improvement in workforce participation among people who aren’t near retirement age, according to the paper.
For people in between the ages of 25-54, participation could rise further still, and then remain level for the rest of the decade at around 82 percent.
