Republicans’ desperate labor force lie

The United States is in the midst of one of the longest economic expansions in its history, but you would never know that from listening to the Republican candidates for president.

In the face of steady monthly jobs gains, Republicans have latched on to a different metric to claim that the tumbling unemployment rate is a mirage: the labor force participation rate. This figure — a measure of what percentage of the population is either employed or actively seeking work — has fallen from a high of nearly 70 percent in 2000 to 62.4 percent today.

To the Republican candidates, this is proof that Obamanomics really has been the catastrophe they always believed it to be. But falling labor force participation has little to do with the Great Recession or Obama’s policies. It’s really about preexisting long-term trends, but that hasn’t stopped conservatives from arguing otherwise.

The most patently egregious rhetorical misuse of the LFPR is the notion that 40 percent of Americans aren’t working. This figure has been an outraged staple of Donald Trump’s stump speech for months, and was repeated by Maria Bartiromo at the Fox Business Network debate. But the bulk of this 40 percent are retirees, students, and stay-at-home parents — not the shiftless deadbeats or displaced victims of the Obama economy that conservatives would have you believe.

Certainly, the LFPR has been on a steady decline for many years now. But business cycle factors, such as the lingering effects of the Great Recession, account for very little of this decline. Goldman Sachs attributes only 0.3 percentage points of the decline to cyclical forces. The White House’s Council of Economic Advisers says it’s at most 1 percent, likely made up of the Great Recession’s long-term unemployed giving up and dropping out of the labor force.

So what accounts for the big decline in the LFPR? Most of the decline is simply the natural result of Baby Boomers reaching retirement age and exiting the workforce. The CEA estimates that the aging population accounts for half of the decline in the labor force participation. Another large chunk are greater numbers of young people attending college and graduate school rather than entering the workforce.

It also includes an increasing number of women leaving the workforce to stay home with children. This is a decision that traditionalist conservatives generally applaud, but there should be some cause for concern. After rising for decades, women’s labor force participation rate has started to tick back down, and there’s evidence that escalating childcare costs are squeezing mothers out of the workforce. Providing government assistance for childcare costs and advanced early education would help reverse this trend.

Some of the LFPR decline may also be a result of increases in federal disability rolls. Since the 1980s, the number of individuals receiving Social Security Disability Insurance has grown substantially and in close correlation to the shuttering of the blue-collar economy. As disability standards have loosened, the program has increasingly become a safety net for jobless middle-aged blue-collar workers. And once workers go on disability, they are unlikely to leave the program to rejoin the workforce.

Because most of the decline in LFPR comes from seniors aging out of the labor force, this actually makes the recent jobs numbers look even better. While the old rule of thumb was that the economy needed to add about 150,000 jobs per month just to keep up with population growth, the exodus of retirees out of the job market has changed that. According to White House economic adviser Jason Furman, we now need only about 77,000 new jobs each month to break even. This makes this month’s 271,000 jobs number look even better

Granted, the economic recovery has been steady has fallen short for many Americans, and the wage effects of the recovery have been far too muted for the majority of workers. But we’ve been in an extended period of economic growth for over six years now.

Still, Republicans want to pretend that we are in the midst of an economic downturn, as Sen. Marco Rubio asserted in Tuesday’s debate. But that’s just not the case. Their brazen statistical malpractice only proves it.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s