Economists are distinguished by the ability to find bad news where others see good news. In the old debate over whether the glass is half empty or half full, an economist would suspect that the glass is leaking and the water is polluted anyway.
But we dare not dismiss a troubling signal in an otherwise improving economic situation.
The labor force participation rate, the percentage of the labor force ?that actually is working or seeking work, is now lower than in almost 40 years -- and it is still falling. Relatively fewer of the people that we would hope to see working or seeking work are actually doing so.
Now we know some of the reasons, but we cannot explain all of the decline; and it poses multiple vexing problems.
- As the Baby Boomers retire, continued economic growth requires someone to take up the slack.
- Staying out of the labor force robs one of the skills needed to live a productive life. Further, as grandmothers used to warn, "Idle hands are the Devil's playthings."
- Draining the labor force strains our social services. ?
Non-participants who are young suffer grievous, crippling wounds. Many observers attribute at least some of Europe's social and economic woes to their low labor force participation rates.
So we understand part of the problem, and we know that policies like the earned income tax credit seem to help. But, for the sake of our future, we must decipher the problem fully in order to prescribe real
?solutions.
I'm Bob Evans, and that's my perspective.
