Monday, January 27, 2014

Ugly labor force participation trends

You can hide a lot in plain sight in a simple graph. Here's one that has volumes hidden in plain sight.


By original estimates we were supposed to peak out in 2012 on labor force participation. Instead we're almost 4% under that figure and looking to fall further. That's a huge difference in how the US works, akin to the 1960s jump in participation but with the direction reversed. It points to a United States less able to pay its debts, less able to innovate, lead, and less able to support its military position which has historically been supported by the country's economic power. In essence it's a country that is rather short of hope for the future.

We're moving to a society with similar to 1940s labor participation rates but with a much more confused set of social expectations, something that is inevitably leading to less happiness in general. There are no convincing narratives out there why this very large secular trend should reverse. It might happen but nobody seems to have a good tale as to why. This year will see another 10 year labor force projection release. So far it is looking like the 2014 10 year estimate will be another "surprise" where the curves drop even further, even faster. December's rate was 62.8% after all. We weren't supposed to hit that until much later in the decade.