The economy is booming. Unemployment is low. Consumer sentiment is high. Wages and household income are rising, especially in the low- and middle-range. So one would think that the US labor market participation rate would also be going up. Think again:
Problem is, the civilian labor market participation rate isn’t a good indicator of household wellbeing, because it doesn’t control for age-related demographic changes in the population*. It’s just a measure of people age 15-64 who aren’t working and aren’t looking for work. Such people include disabled persons, students, early retirees, and caregivers - who usually have sources of income other than their own labor. A much better of indicator of household well-being is the labor market participation rate for individuals between 25-54, which excludes early retirees, most students, and a good portion of the disabled (who skew older). And here the picture looks better:
What the above chart shows is a healthy and rising labor market participation rate for prime working-age adults. There’s room for improvement, of course, but not much.
—
* Much of the rise in 1990s and early 2000s labor market participation had to do with increasing numbers of working women and prime-age baby boomers. Now the boomers are retiring (many before age 64). Female labor market participation plateaued some years back. but is beginning to rise again.
References:
Federal Reserve Bank of St. Louis Economic Research Division. Updated: Jan 10, 2020. https://fred.stlouisfed.org/series/CIVPART Accessed 1/26/20
Federal Reserve Bank of St. Louis Economic Research Division. Updated Jan 10, 2020 https://fred.stlouisfed.org/series/LNS11300060
“Women staging a labor force comeback” Stacy A. Anderson, Lauren Bauer, Ryan Nunn, and Jay Shambaugh Tuesday, March 26, 2019 https://www.brookings.edu/blog/up-front/2019/03/26/women-staging-a-labor-force-comeback/