What Do Fewer Workers Mean for the U.S. Economy?

BY Paul Solman  March 7, 2012 at 3:50 PM EDT

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Photo by Scott Eells/Bloomberg via Getty Images.

Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Here is Wednesday’s query:

Name: Taylor Vincent

Question: Surprised by the significant change in the unemployment rate, I looked into the Bureau of Labor Statistics numbers for the first time in a long time. Based on the numbers, the rate is correct. But I bumped into an issue which might be of interest – the change in the Civilian Labor Force Participation Rate from 64.2 percent to 63.7 percent. This means that the ratio of worker to non-worker has fallen significantly. Since we look at the unemployment rate as a proxy for the economic strength and contribution of workers, should we also consider this offsetting factor? What weight should we give it?


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Paul Solman: It’s never safe to assign much weight to month-to-month fluctuations in the government’s labor data. Here’s a longer-term picture for Americans 16 and older. The dramatic rise in the rate starting in the ’60s is mostly women entering the workforce. And male members of the Baby Boom, too, presumably, as its members reached working age. (I myself, born a year ahead of the Boom, joined the workforce in 1969, near the bottom.)

Civilian labor force participation rate, 16 years and over

BLS Labor Force Statistics from the Current Population Survey

A good number to track in the months ahead.

The Bureau of Labor Statistics publishes the change in the rate on the first Friday of every month. Check it out for the latest number, and a historical view that puts it in context.

And check here on Friday for the most inclusive under- and unemployment tally, our monthly U-7 statistic. It still totaled 27 million Americans last month.

This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions