U.S. labor force participation will fall over the next decade, scraping lows not seen since the Nixon administration, the Department of Labor projects in a new study.
In an article in its monthly labor review for December, the agency projected that the labor force participation rate will fall from 62.9 percent today to 60.9 percent in 2024. That would be the lowest since late 1973.
Workforce participation, a measure of people who have or are looking for jobs, has fallen steeply in the aftermath of the financial crisis. The participation rate stood at 66 percent at the official start of the recession in December 2007 and has fallen steadily since.
The projections from the Labor Department illustrate that although the dropoff in participation was driven partly by the severity of the recession, the labor force is likely to keep shrinking for other reasons. Those include the ongoing retirement of the Baby Boom generation, that young people are seeking more more years of education and other long-term trends.
The Labor Department sees the decline in workforce participation among prime working age adults, those between ages 25 and 54, halting over the next decade, with an uptick in the group aged 50 to 54. But the aging of the population will keep the labor force participation rate falling.
Of the 7.8 million additional workers expected by 2024, more than 90 percent will be Hispanic, the Labor Department projects. Rising Hispanic participation in the U.S. workforce is driven by immigration and by Hispanic migrants tending to be younger and having more children, meaning that they will account for more working-age people over the next deacde. While the Labor Department projects that the number of Hispanic workers will increase by 7.1 million in 10 years, the white, non-Hispanic labor force is expected to decline by more than 3 million.
The Labor Department’s projections are based on estimates of the U.S. population and current trends among different age groups, racial and ethnic categories, sexes, and other subgroups.
The analysis does not attempt to tease out how much of the decline in labor force participation is attributable to the weakness of the economy, which has led some people to stop looking for work and thus drop out of the official labor force even though they want jobs. One estimate, from the White House Council of Economic Advisers, found that about half of the decline in the labor force participation trate through late 2014 was caused by ongoing demographic factors.
Over the past year, however, the economy has added nearly 3 million jobs and the unemployment rate has fallen from 5.8 percent to 5 percent.
