About That "Expected" Drop In Participation Rate

Courtesy of Mish.

Calculated Risk had an interesting but misleading post A decline in the participation rate was expected due to the aging population.

This decline in the participation rate has been expected for years. Here are three projections (two from before the recession started). The key to these projections is that the decline in the participation rates was expected:

1) From BLS economist Mitra Toossi in November 2006: A new look at long-term labor force projections to 2050
2) From Austin State University Professor Robert Szafran in September 2002: Age-adjusted labor force participation rates, 1960–2045
3) BLS economist Mitra Toossi released some new projections for the participation rate as of January 2012: Labor force projections to 2020: a more slowly growing workforce.

Misleading Chart

Yes, a decline in the participation rate was expected. My problem with his analysis regards the miss-portrayal of the rate at which the participation rate was scheduled to happen.

Calculated Risk posted this chart.

The above chart was created in 2012 and does not remotely match demographic projections made earlier.

For example, Robert Szafran estimated in September of 2002 the participation rate pattern would look like this.

Year Participation Rate
2005 66.8
2010 65.9
2015 64.6
2020 63.0

In September 2005 the participation rate was 66.1. In September of 2010, the participation rate was 64.6 which Szafran  did not expect until 2015. The current participation rate is 63.6, a number Szafran expected in 2019 perhaps.

BLS analysis was much worse even though the BLS had more years of data to consider….



Continue Here

Enter Email Address

Speak Your Mind

%d bloggers like this: