No, Millions of Americans Have NOT Dropped Out of the Labor Force Just Because They’re Retiring Baby Boomers

Despite the Happy Talk,  Unemployment Is Still High

Zero Hedge notes that the number of Americans in the labor force has dropped to 1978 levels:

The civilian labor force … dropped from 155.3 million to 154.9 million, which means the labor participation rate just dropped to a fresh 35 year low, hitting levels not seen since 1978, at 62.8% down from 63.0%.

And the piece de resistance: Americans not in the labor force exploded higher by 535,000 to a new all time high 91.8 million.

Charles Hugh Smith shows the disturbing trend line:

The mainstream media portrays the cause of this crash as simply being retiring baby boomers, as shown by the following screenshots from a Google search:

But a February 26 report from the nonpartisan Economic Policy Institute shows this is false:

Since the start of the Great Recession over six years ago, labor force participation has dropped significantly. Most of the drop—roughly three-quarters—was due to the lack of job opportunities in the Great Recession and its aftermath.   There are now 5.8 million workers who are not in the labor force but who would be if job opportunities were strong.


More than 70 percent of the 5.8 million missing workers are under age 55. These missing workers under age 55—4.2 million of them—are extremely unlikely to have retired and are therefore likely to enter or reenter the labor force when job opportunities substantially improve.


The Washington Post noted in January:

The participation rate for workers between ages 25 and 54 fell sharply during the recession and still hasn’t recovered. Obviously, retirements can’t explain this:

So, what’s going on? One theory is that the weak job market is causing people to simply give up looking for work — they’re crumpling up their résumés and going home. An recent study from the Boston Fed suggested that these “non-inevitable dropouts” might even account for most of the decrease. Among other things, the authors noted that the labor-force decline has been far sharper for all age groups than simple demographics would predict.


So, why does the size of the labor force matter? If people are leaving the labor force for economic reasons (and they’re not going back to school), it would mean that the economy is in much worse shape than the official unemployment rate suggests. The jobless rate is officially 6.7 percent, but that only counts people who are actively seeking work — not labor-force dropouts. [Remember, you have to include labor-force dropouts in order to arrive at a useful unemployment number.]

In other words, the conventional explanation holds no water.

Despite all happy talk to the contrary, we have a “jobless recovery” – a permanent destruction of jobs – which is a redistribution of wealth from the little guy to the big boys. (And see this.)

No wonder Americans aren’t feeling the love.

And everything the government has been doing since 2008 has made unemployment much worse. And  here and here.

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  • Charlie Primero

    Perhaps some of the decline is due to more Americans learning to earn money “off the books”.

    I hope so.

    • That’s my thinking too. This is actually a good sign. The employer/employee relation has become predatory (gov’t) and abusive (employer). This works to starve the gov’t and hopefully the idea of gov’t as a necessary evil will die on the vine.

  • jo6pac

    Great title, yes I didn’t want to retire but my former employer saw it differently. I just live off a small pension and SS enough to allow me to grow my own food and stay as busy as I want. Then millions of other Amerikans are that lucky, sad.
    I do know a lot of people that have done what CP and NS are saying but their all struggling also.
    This site shows the struggle across Amerika and it’s not pretty.
    Dailey Job Cuts

  • With OBCare I only see it getting much worse. Employers will be cutting employees and benefits in order to avoid more taxes. They will, “do more with less.”

  • What seems to be massively overlooked is that a huge percentage of the job loss is housing related and there has been no meaningful recovery in the new construction market, we are still a year out for that. At the peak it was estimated that in many markets about 1/2 of the job market was housing related.. And since housing was the cause of the crash there is no constructive way to rekindle the Housing related jobs.. it is just going to take time… This is the first recession in our lifetimes that has not been fixed by kick starting the housing market, because there was no way to do it. Think about each of the prior recessions you remember the the 1st thing the Gov’t did was to enhance housing economics, until at last tat bubble burst…. So patience and I guess that we will see recovery in the new home market begin this year tentatively and more robustly next year, still of course unlikely to meet prior levels…And keep in mind that the unemployed housing related jobs are not readily substituted by other forms of employment due to skills misss matches.

    • franklin delano

      What we need is a new administration . Got it Wake up and smell the roses before it”s to late

      • Dan Wild

        Grownups are talking here. Go play outside.

  • franklin Delano

    It’s because of Obama and his liberals . This administration does not care about putting people to work . Period . Lets get the pipeline going and put a couple of hundred thousands back to work .

  • ChuckS123

    How could so many people quit looking for a job? How do they got food, clothing, shelter, etc?

    1) I’m sure a lot are on welfare or disability, but I don’t think nowhere near 92 million.
    2) Some are probably off the books.
    3) Fewer people are probably working in some families – maybe husband or wife lost a job. I’d think a lot of these people are looking for jobs, however.
    4) I think a lot of people who are looking for jobs are somehow categorized as not looking to help the phony government numbers. I heard that people who ran out of unemployment benefits are considered to be out of the work force.