Charting Errors in BLS Participation Rate Projections

Courtesy of Mish.

The following graph plots labor force participation rates by BLS economist Mitra Toossi in November 2006 with new projections for the participation rate as of January 2012:

click on chart for sharper image

Chart Data

Mitra Toossi in November 2006: A new look at long-term labor force projections to 2050
Mitra Toossi in January 2012: Labor force projections to 2020: a more slowly growing workforce

I asked Doug Short at Advisor Perspectives to plot the difference as a follow-up to my post About That “Expected” Drop In Participation Rate.

As you can see, the participation rate is plunging even faster than the recent January 2012 projections.

Date Value 2006 Estimate
1/1/2006 66.2 66.2
1/1/2007 66.0 66.1
1/1/2008 66.0 66.1
1/1/2009 65.4 66.0
1/1/2010 64.7 65.9
1/1/2011 64.1 65.8
1/1/2012 63.7 65.6

76% of Decline In Participation Rate Since 2006 Was Unexpected

The current participation rate is 63.7. In 2006, Toossi estimated the participation rate would be 65.6, a drop of .6 percentage points from 66.2. Instead, the participation rate fell by 2.5 percentage points.

Mathematically, 76% of the decline since 2006 was “unexpected” (1.9 of 2.5)….

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