America's "Otherwise Engaged" Labor Force

Let’s start by looking at the facts about America’s labor force.   

First, the BLS (bureau of labor statistics) suggests that the US population from which the labor force is drawn is citizens over the age of 16.  Here is the chart of that population group since 1990:

This chart shows that the population has risen steadily and significantly over the last 22 years, going from 188 million to just over 243 million – 50+ million more Americans now eligible for the work force.

Next let’s look at the BLS numbers for those who are in the workforce meaning those citizens who are either working or looking for work (the rest are otherwise engaged.)

This chart shows that a fair number of those who could be in the work force are otherwise engaged.  Specifically, those in the workforce in 1990 numbered 126 million and in 2012 numbered 154 million, an increase of only 28 million during the 22 year period.   This means, simply, that about one-half of those who could be in the workforce were working or looking for work.  Which means about one-half were otherwise engaged.

So, we can conclude that joining the labor force by either working or looking for work is a declining activity in our country.

Now, let’s look at the numbers for these folk who could be in the labor force, either working or looking for work, but are not, over this 22 year period:

Wow.  A lot of people are not much interested in working it seems.  It is apparently in vogue to be “otherwise engaged.”  It’s even more interesting to just look at the participation rate in the labor force (those who are working or looking for work) as a percent of the total labor force over this 22 year period.  Here is that chart:

More folks are just not working anymore and, surprisingly, it is not just an Obama phenomenon is it?  The rate of people getting into the labor force held pretty steady until 2001 – at about 67%.  It is now below 64% and was dropping during most of Bush II’s term (we would ask our convenient Keynesian friends to address this fact) and then really  dropped under Obama.  Is that what he means when he says hope?  Hope you don’t have to work?  Dreams of my father – hope you’re not working?

So, what can we conclude from these facts?  Let’s ask some questions first:

1.    Why would the labor force participation rate decline even before the recession and the housing bubble bursting and the financial system getting shaky?

2.    Could it be that there is now something systemic in our governance/entitlement/expectation system that gives citizens a way to not work?  An attitude or inclination to not work?  Enough goodies to get by without working?

3.    Could there be a correlation between deficits and rising debt (we didn’t show these numbers today but, as you know, they have skyrocketed during the period 2001 to present) and the inverse effect on labor participation rate?  The more deficits and debt the fewer people who work or look for work?

4.    Could there be a message in these numbers that the stimulus and the bailouts and the programs of unemployment checks and reductions in social security premium payments and all the rest of the goodies government now offers (Keynesian economics, of course) actually prolong and perhaps even encourage people to not work?

5.    Or could it just be that we are so rich a society at all levels that more and more citizens over the age of 16 just don’t need to work?  LBJ’s great society is upon us?  Maybe we all should quit complaining?  We made it?  This is the great society.

We can reach two conclusions – regardless of whether you are defined as left, middle or right or progressive or conservative or libertarian or not really sure – we cannot raise enough revenue to pay our government bills these days and that situation is not improving.  It’s worsening.  Remember, you can never get away from deficits = debt = destruction. 

Two, we could also conclude that prior to 2001, things were better.  Now, they could have been better for passing reasons – internet growth, technology expansion creating new businesses and many new jobs; growing demand for US products overseas before overseas manufacturers got in the game; no wars draining the treasury; and, maybe a bit less of this idea that more government is good for all.

Perhaps the change that we really need is a Clinton in the white house.  Or one heck of a push to develop new technologies which would mean a laissez faire (suspend all government rules, laws and bureaucratic involvement) attitude toward new business creations; cut back government spending to 2001 levels; get rid of the Bush tax cuts and the Medicare drug program and quit with the ^%*$%#  wars.

Oh, for the good old days!

And one more conclusion – a fact.  If the labor force participation rate held at 67% (good old days of Bill Clinton) the unemployment rate today would be over 12% which is a nice way of saying – don’t believe your government statistics – they’ve been jiggered.  America is trending rapidly toward a non-working, “otherwise engaged” labor force.