Share of working people a puzzle — especially in Georgia

Scratch your headOne of the ongoing and troubling economic trends is the gradual shrinkage in the share of people who are working.

The decline has been national, but it’s pretty dramatic in Georgia, where — despite population growth — there are now 231,000 fewer people working than in 2008 as the recession was kicking into high and painful gear.

Economists call it ‘labor force participation’ and it’s been falling, even as the economy has been rebounding. Because participation was rising during the boom times, hefty hiring and higher wages of the late 1990s, they wonder, if falling participation is a sign that something is wrong with the labor market.

Maybe a people just don’t think it’s worth it to look for a job.

In fairness, the decline did accelerate during the recession, but it didn’t start then. And even the experts scratch their heads and wonder: What is going on? And should we even be worried? Is this a bad thing?

After all, even in a healthy, hard-charging economy we ought to have millions of students and stay-at-home parents, non-working elderly and children too young to bring home a paycheck. You’ll have people whose spouse brings home a hefty paycheck who spend their time at the mall or mahjong. Additionally, there are always likely to be many people too sick or disabled to work.

Where the others have gone, no one is precisely sure. Some have retired. Some stay home with children. Some are back in school. Some has just plain given up on finding a job they want. Some are likely hanging out in a tree house reading and sipping a cool drink. But probably not many. And in any event, no one has the exact numbers for any of this.

But the more people we have outside the workforce, the more productive working people need to be — that is, to provide for everybody, working and otherwise.

Moreover, the people outside the labor force are — by definition — not looking for work. So they are not counted as unemployed.

So as the share of people in the labor force drops, it tends to make the unemployment rate look better. Last month, for example, the jobless rate in Georgia dropped below 6.0 percent for the first time since 2008. But there was only modest hiring — the biggest change was a decline in the labor force.

In the past ten years, only three states saw more of a decline than Georgia in the share of people working people, according to Atlanta-based Garner Economics.

But there’s a a study out today that makes the puzzle more puzzling — and makes Georgia’s performance look even worse.

Because we may not know exact numbers, but we know a lot of people leaving the work force have been baby boomers retiring.  And we know some are people in school. And those departures do not indicate anything unhealthy about the labor market.

But there’s a way to factor out both of those groups: by looking only at people between 25 and 54. And looking only at that “prime working age” demographic, Georgia had the second-largest drop, according to a study released by Pew Charitable Trusts.

The Pew study…

Reader Comments 0