LFP has been edging downward since the turn of the century, except for a couple of years at the height of the housing bubble.
How did the economy do in the period 1948-1968 when LFP never went above 60%? GDP nearly quadrupled, and fell in only one year, 1949. We sure wouldn't want another strong, stable expansion like that.
The decline is explained by a number of factors.
"The labor force participation rate of
women, which peaked in 1999, has been on a declining trend. In addition, instead of entering the labor force,
baby boomers are retiring in large numbers and exiting the workforce. Once again, the baby-boom generation has become a generator of change, this time in its retirement. Moreover,
the jobless recovery of the 2001 recession, coupled with
the severe economic impact of the 2007–2009 recession, caused disruptions in the labor market." —
Labor force projections to 2022: the labor force participation rate continues to fall
"The economic recovery from the 2007-09 recession has been slow, which may have propelled people to go back to school, stay at home with their kids, or give up on a search altogether when they could not find jobs in their field."
"The trick is to determine how much of the drop represents the impact of a lagging economy, which is worrisome, and how much is due to non-worrisome factors, such as the aging of the adult population," said Gary Burtless, an economist at the Brookings Institution, in a 2013 PolitiFact interview. —
PolitiFact, January 26, 2014
A recent
Business Insider article argues that:
The author points to a recent study by Shigeru Fujita, a senior economist at the Federal Reserve Bank of Philadelphia, titled "On the Causes of Declines in the Labor Force Participation Rate."
"Fujita demonstrates that 'discouraged workers' only made up about a quarter of those leaving the labor force between 2007 and 2011, while the decline in the participation rate since the first quarter of 2012 is entirely accounted for by increases in non-participation due to retirement."