Introduction
The rate of labor force participation (the share of the civilian noninstitutionalized population aged 16 and older in the labor force) has declined significantly since 2007. To what extent were the Great Recession and tepid recovery responsible?
In this post and one that will follow, we offer a series of charts using data from the Current Population Survey to explore some of the possible reasons behind the 2007-13 drop in participation. This first post describes the impact of the changing-age composition of the population and changes in labor force participation within specific age cohorts-see Calculated Risk posts here and here for a related treatment, and also this recent BLS study. The next post will look at the issue of potential cyclical impacts on participation by examining the behavior of the prime-age population.
Putting the decline in context
After rising from the mid-1960s through 1990, the overall labor force participation rate was relatively stable between 1990 and 2007. But participation has declined sharply since 2007. By 2013, participation was at the lowest level since 1978 (see chart 1).
For men, the longer-term declining trend of participation accelerated after 2007. For women, after having been relatively stable since the late 1990s, participation began to decline after 2009. The decline for both males and females since 2009 was similar (see chart 2).
The impact of retirementÂ
One of the most important features of labor force participation is that it varies considerably over the life cycle: the rate of participation is low among young individuals, peaks during the prime-age years of 25 to 54, and then declines (see chart 3). So a change in the age distribution of the population can result in a significant change in overall labor force participation.
The age distribution of the population has been shifting outward for some time. This is a result of the so-called baby boomer generation-that is, people born between 1946 and 1964 (see chart 4). The oldest baby boomers turned 62 in 2008 and became eligible for Social Security retirement benefits.
