Younger people are working less

Originally posted December 8, 2017.

While the unemployment rate has continued to drop in recent years, the labor participation rate hasn’t grown much.

We may assume that the main reason is that we have an aging population.

That’s true, but that’s not the only factor.

Actually, older Americans (those 55 and older) are more likely to be working, while younger Americans are less likely to be working.

The labor participation rate among Americans 16 to 24 has decreased from 65.5% in 1996 to 55.2 from 1996 to 2016. The labor participation rate among Americans 25 to 54 has decreased from 83.8 to 81.3 from 1996 to 2016.

The Bureau of Labor Statistics projects that this trend will continue.

Stanford University Professor Edward Lazear notes in a Wall Street Journal column that just before the 2007 recession, the employment rate peaked at 63.4%, dropped to 58.2% in 2010, and now is at 60.2%.

So we’re still 3% lower than the pre-recession peak. And as employers seek to fill more jobs, it may be hard to do if that employment rate doesn’t budge.

Lazear notes in the same column that one possible reason younger people are working less is due to an increase in disability claims.

In fact, the number of people on disability has increased from seven million in 2007 to nine million now, an increase of almost 30%!

An article by the BLS does state that researchers say that an increase in Social Security disability insurance (SSDI) has in fact contributed to a lower labor participation rate among younger people, including men.