Reclaiming Common Sense

There are fewer people working between the age of 35 and 54 than during August 2008. This should not come as a surprise to those who have read this column over the past few months and years. The participation rate has been dropping for over eight years. Participants are those who are either employed or unemployed and looking for work. What is startling is that we have 1.6 million less people between the age of 40-44 working now than we had working during August of 2008.  Some of this could be as a result of aging up during the past eight years. The problem is that there are fewer people working between the ages of 45-49, and 50-54. There has been a huge spike in the number of people working between the ages of 55-59.There has been a spike in those working between the ages of 60-64, so these people are not retiring. There has been a spike for those over the age of 65-69, 70-74 and over the age of 75.

The Workforce Population has decreased for those in the prime employment years: 35-49 years of age. We have more people working over the age of 50 than we did during August 2008. The number of people between the age of 50-54 have declined since 2012. The number of those over the age of 60, 65, 70, and 75 years of age has been rising dramatically since 2012. The problem is that the people working between the ages of 35-49 were hit the hardest during the recession and that fifteen year age group has not recovered during the past 5 years. Some sliding between age groups could be happening, as previously mentioned. Not all of the differences can be attributed the the graying of the workforce.

The workforce participation rate has dropped across all ages under the age of 65 since 2008. The only age groups that have seen increases in their participation rates were those 65-69 years old, 70-74 years old, and over the age of 75. It is important to note that the workforce participation rate for those over the age of 20 and under the age 59 are all higher than the national average. This means that those over the age of 60 are dragging down the participation rate. Remember that the participation rate across all ages are down since August 2008 except for those over the age of 65.Another way to look at this is that everyone under the age of 64 is pulling down the average because they are participating less than during August of 2008.  Pick your message.

What if it is the age shift? It does not appear to be so. The percentage of people working over the age 55 has increased since 2008. This means that people are not retiring as early as they used to retire. The percentage of those 35-39 years of age have been making up a smaller percentage of the workforce since 2005. That percentage decreased from August 2005 through August of 2011/2012. There has been some recovery in this age group recently. We have seen massive declines in the percentage of the workforce between the age of 40-44 almost uninterrupted since 2005.The same can be said for those 49-54. Note that the employment rate is less than 60%. This means that more than 40% of the population over the age of 16 is not working.

Why doesn't the unemployment rate plus the employment rate equal the participation rate? It's just math. The employment rate is the number of jobs divided by the population. The unemployment rate is the number of unemployed workers divided by the number of participants.The unemployment rate, the official value, is lower across the board than it was during August of 2008.  The unemployment rate is higher for every group other than the 20-24 year olds, when compared to 2007.The employment rate is only slightly higher than its recent generational low. The employment rate is slightly higher than its recent August low.
The workforce population for those 35-49 has decreased since 2008. The number of workers between 30 and 54 have decreased since 2008. The participation rate for those under the age of 65 has decreased since 2008. Do we attribute the decline in participation between the 35 and 49 to the drop in the population of that age group? If the population and the workers had declined equally the participation rate would be roughly the same. We have lost a disproportionate number of workers and jobs between the ages of 35 and 49. Is it because of "aging out" since 2008?

Not all of it can be attributed to the aging workforce. The workforce is graying. Millions of people are not participating in the economy or the recovery.

Participation Rate Down for those 16-64 Years Old Since August 2008


The monthly jobs report provides a wealth of data and numerous opportunities to examine the data. How many jobs were added or lost? How many workers were added or lost? How did the unemployment numbers change? How did the participation rate change?  How is President Obama doing compared to Presidents Ronald Reagan, Bill Clinton, or George W. Bush at the 91 month mark? How are we doing in the employment by gender? By race? By Age?

There are more people unemployed now that during August of 2007. July 2007 was the peak employment month prior to the Great Recession. We see general increases in almost every age group. We have fewer unemployed workers between the ages of 16 and 24 than we had during August of 2007. We have more unemployed workers in every age group over the age of 25. We have fewer unemployed workers than last year, that is true. It all depends upon which month or which year you want to discuss. It is very important to note that we have more unemployed workers over the age of 60 than we had during August of 2007 or August 2008.