by Calculated Risk on 3/15/2016 12:31:00 PM

A few excerpts from a research piece by Goldman Sachs economist David Mericle: Breaking Down the Rebound in the Participation Rate

The labor force participation rate has risen 0.5 percentage points (pp) since its September low. ... The largest contributors to the rebound have been, in descending order, declines in the share of the population in school, retired, disabled, and not wanting to work. Participation rates for all age groups have risen, reflecting declines in the share of young people in school, in the share of prime-age workers in all non-participation categories, and in the share of older people retired.

At this point, we see the cyclical “participation gap” as nearly closed. While some types of non-participators could be drawn into a very hot labor market, our baseline expectation is that the participation rate will decline by 0.25pp per year from its current level.
...
our forecast for the breakeven rate of payroll growth at 85k.

Click on graph for larger image.

CR Note: This graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate (blue line) increased in February to 62.9%. This is the percentage of the working age population in the labor force.

I agree with Mericle that most of the "participation gap" has closed, and I expect the participation rate to decline further over the next decade.

Note: A large portion of the recent decline in the participation rate is due to long term trends and demographics.

Also note that Mericle estimates that payroll growth of 85,000 per month will keep the unemployment rate unchanged.