Sunday, July 24, 2011

Labor Force Participation Rate Update

by Bill McBride on 7/24/2011 06:34:00 PM

Tracking the participation rate for various age groups monthly is a little like watching paint dry, but the trends are important. Here is a look at some the long term trends (updated graphs through June 2011).

The following graph shows the changes in the participation rates for men and women since 1960 (in the 25 to 54 age group - the prime working years).

The participation rate for women increased significantly from the mid 30s to the mid 70s and has mostly flattened out - although the rate has been declining recently (down to 74.6% in June). The participation rate for men has decreased from the high 90s to 89.0% in June 2011. (down slightly from May)

Labor Force Participation rates Men and WomenClick on graph for larger image in graph gallery.

There will probably be some "bounce back" for both men and women (some of the recent decline is probably cyclical), but the long term trend for men is down.

The next graph shows that participation rates for several key age groups.

There are a few key long term trends:
• The participation rate for the '16 to 19' age group has been falling for some time (red). This at 34% in June.

Labor Force Participation Rates, Selected Age Groups• The participation rate for the 'over 55' age group has been rising since the mid '90s (purple), although this has stalled out a little recently (perhaps cyclical).

• The participation rate for the '20 to 24' age group fell recently too (perhaps more people are focusing on eduction before joining the labor force). This appears to have stabilized - although it was down to 70.5% in June, and I expect the participation rate to increase for this cohort as the job market improves.

Labor Force Participation rates over 55 age groupsThe third graph shows the participation rate for several over 55 age groups. The red line is the '55 and over' total seasonally adjusted. All of the other age groups are Not Seasonally Adjusted (NSA).

The participation rate is generally trending up for all older age groups.

The increase in participation of older cohorts might push up the overall participation rate over the next few years, however eventually the 'over 55' participation rate will start to decline as the oldest baby boomers move into even older age groups.

I've been expecting some small bounce back in the participation rate, but I don't think the bounce back will be huge - and we haven't seen it yet. This will be a key number to watch over the next few years.

Yesterday:
Summary for Week Ending July 22nd
Schedule for Week of July 24th