Where Have All the Workers Gone? An Inquiry into the Decline of the U.S. Labor Force Participation Rate

• Published in: Brookings papers on economic activity 2017-10, Vol.2017 (2), p.1-59
• Main Author: KRUEGER, ALAN B.
• Format: Article
• Language: English
• Subjects: Activities of daily living; Age; Age groups; Aging; Business cycles; Counties; Demography; Drug abuse; Drug prescriptions; Drugs; Economic activity; Economic models; Emotional well being; Employment; Enrollments; Great Recession; Immigration; Labor force; Labor force participation; Labor force participation rates; Labor market; Medications; Men; Narcotics; Older workers; Opioid analgesics; Opioids; Pain; Participation; Population; Population aging; Prescription drugs; Recessions; Reforms; Retirement; Secularism; Trends; Unemployment; Wellbeing; Women; Workers; Workforce; Working women; Younger workers
• ISSN: 0007-2303; 1533-4465; 1533-4465; 0007-2303
• DOI: 10.1353/eca.2017.0012

The U.S. labor force participation rate has declined since 2007, primarily because of population aging and ongoing trends that preceded the Great Recession. The labor force participation rate has evolved differently, and for different reasons, across demographic groups. A rise in school enrollment has largely offset declining labor force participation for young workers since the 1990s. Labor force participation has been declining for prime age men for decades, and about half of prime age men who are not in the labor force may have a serious health condition that is a barrier to working. Nearly half of prime age men who are not in the labor force take pain medication on any given day; and in nearly two-thirds of these cases, they take prescription pain medication. Labor force participation has fallen more in U.S. counties where relatively more opioid pain medication is prescribed, causing the problem of depressed labor force participation and the opioid crisis to become intertwined. The labor force participation rate has stopped rising for cohorts of women born after 1960. Prime age men who are out of the labor force report that they experience notably low levels of emotional well-being throughout their days, and that they derive relatively little meaning from their daily activities. Employed women and women not in the labor force, by contrast, report similar levels of subjective well-being; but women not in the labor force who cite a reason other than “home responsibilities” as their main reason report notably low levels of emotional well-being. During the past decade, retirements have increased by about the same amount as aggregate labor force participation has declined, and the retirement rate is expected to continue to rise. A meaningful rise in labor force participation will require a reversal in the secular trends affecting various demographic groups, and perhaps immigration reform.