White House argued Monday that the labor force participation rate has now stabilized, and went further by saying the last few months could indicate that the long-term unemployed are “finding their way back to work.”
But that goes against a December analysis from the Labor Department’s Bureau of Labor Statistics, which predicted that the labor force participation rate will continue to fall over the next 10 years.
The labor force participation rate is the percentage of working age people who are employed, or who are unemployed but are looking for work. In July, BLS reported a rate of 62.9 percent — a level not seen in about 30 years, and one that has led to criticism from Republicans that over-regulation is making it harder for people to find work.
Many have said the falling rate is a sign that millions of people have become “discouraged” workers, or those who have given up on looking for work after months or even years of trying unsuccessfully.
In a Labor Day blog post, Council of Economic Advisers Chairman Jason Furman and National Economic Council Director Jeff Zients noted that the labor force participation rate has held steady for months.
“Crucially, the recent decline in long-term unemployment has coincided with a stabilization in the labor force participation rate, suggesting that many formerly long-term unemployed are finding their way back to work,” they wrote. “Indeed, job finding rates and the ability to find stable employment among the long-term unemployed have improved in the first half of 2014.”
The rate has in fact remained stable for the last several months. BLS noted that the rate has been “essentially unchanged since April.”
But late last year, BLS produced a long-term estimate that said there should be no expectation that the rate will hold at 62.9 percent.
“During the 2012–2022 period, the growth of the labor force is anticipated to be due entirely to population growth, as the overall labor force participation rate is expected to decrease from 63.7 percent in 2012 to 61.6 percent in 2022,” it said.
BLS also said it expects that the U.S. workforce will continue to evolve over the next decade, mostly through the aging of the population and immigration.
“BLS projects that the next 10 years will bring about an aging labor force that is growing slowly, a declining overall labor force participation rate, and more diversity in the racial and ethnic composition of the labor force,” it said.