October 26, 2023
There have been numerous articles written since the pandemic explaining why the labor force wasn’t back to pre-pandemic levels. Reasons ranged from early retirement of workers to women not re-entering the force because of childcare to people living off their savings and staying home.
Yet, as each report on the labor force is published, these “reasons” seem to dissipate.
Labor Force 25–54
Employment of women is the highest on record as of June 2023, according to the Bureau of Labor Statistics (BLS). The record is for women considered in their prime working years ages 25–54.
Men have not reached pre-pandemic levels yet. Their entry into the labor force has been slower.
Americans between the ages of 55 and 64 are now employed at a higher rate than pre-pandemic. Workers over 65 have not come back to the workforce in any significant numbers, but this is the Boomer Retirement phase.
The increase in 25–54-year-olds entering the labor force is offsetting some of the workers retiring.
There have been lots of headlines about the layoffs of tech workers. While this trend has slowed, the numbers don’t show it has had a significant impact on the unemployment rate.
General Labor Force
The Congressional Budget Office in January 2020 anticipated the labor force participation would decline over the decade. It was anticipated second quarter 2023 would be 62.4% but the participation rate actually increased to 62.6%. That might sound small but represents millions of workers.
If we briefly look at the labor market in the Great Recession, those coming back into the labor force were a lot slower than the bounce back from the pandemic. According to Julia Coronado, founder of MacroPolicy Perspective, “People want to adapt, and people want to work: those things are generally true. People are resilient. They figure things out.”
Sources: Wall Street Journal, “Key Age Group Back to Work In Droves” and New York Times, “The Pandemics Labor Markets Myth.”
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