DB 1- Micro

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Forum 1 - Labor Force Participation

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The labor force participation rate is a statistic for the percentage of people involved with employment in some way. There is a formula to calculate this percentage, which according to an article from Investopedia, “is the sum of all workers who are employed or actively seeking employment divided by the total noninstitutionalized, civilian working-age population” (Chappelow, 2020). It is widely accepted that the labor force participation rate is a good indicator of the strength of a nation’s economy. It is also sometimes perceived as a more accurate measure than the unemployment rate, as it excludes those who are incapable of working for reasons such as age, legal status, or military deployment.

              A possible cause for the decline in the U.S. labor force participation rate beginning after 2000 is the nearing of retirement for the “Baby Boomer” generation. This generation was relatively large in quantity and as a result, consisted of, “workers whose retirement age coincides with decline in labor force participation that began in 2000. As these workers retired, they left the labor force and in turn pushed down the total labor force participation rate” (Jacobs, 2015). The sharp rate of decline in the rate in the late 2000s was due to a combination of factors. The economic downturn from 2007 to 2009 resulted in a decrease in household income nationwide during which, “unemployment rates skyrocketed, housing prices and stock portfolios plummeted, and the lives of millions were disrupted” (Kalleberg and Von Wachter, 2018). This short-term effect likely combined with the lasting long-term effects of an aging workforce that were still reaching retirement throughout the decade.

              Participation in the workforce can also be seen as a topic of biblical importance. In Colossians, Paul says, “Whatever you do, work heartily, as for the Lord and not for men, knowing that from the Lord you will receive the inheritance as your reward. You are serving the Lord Christ” (Colossians 3:23-24, ESV). Labor can be viewed in terms of statistics or money, but it is always important to remember that the Bible instructs us to do good work in Christ’s name.

#2

Labor Force Participation

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One way to get a better understanding of a population’s economy is by watching their labor force participation rate (LFPR).  To understand a population’s LFPR one must first look at the labor force whose members are “someone who is already employed or actively seeking work” (Mateer & Coppock, 2018, p. 225).  Once the labor force is determined, only the “work-eligible” members, or those who are willing and able to work, are considered.  If someone is not employed or not looking for work, such as full-time students, children, and people incarcerated in jails, they would not be considered to be “work-eligible” (Mateer & Coppock, 2018, p. 226).  Therefore, the LFPR is defined as “the percentage of the noninstitutional working-age population (those aged 16 and over) reporting themselves as either working or actively looking for work, and it is published by the Bureau of Labor Statistics (BLS) each month (Aaronson, Fallick, Figura, Pingle & Wascher, 2006).

 

The overall LFPR in the United States peaked at 67.1 percent during 1997-2000 and then dropped to a low of 62.8 percentinn 2016, which was a 4.3 percent decline.  Although the 2007-2009 recession had a huge effect on this decline, the decline could be influenced by many factors, including the aging and eventual retirement of baby boomers ("Projections overview and highlights, 2016–26 : Monthly Labor Review", 2017).  Another potential influence could be the decrease in the number of work-eligible individuals due to attending college instead of working full time.  The enrollment rate for 20-24 year olds increased 10 percent over the past twenty years (Aaronson et al., 2006) as a college education became more common.  Yet another interesting theory is that when the LFPR is low, the possibility of tax evasion could be higher which could theoreticaly present a false picature of the LFPR, as well as for the economy as a whole.  (Cebula, 2018). 

 

The Bible states again and again that we should work, doing the best job that we can, and we should avoid laziness.  “Those who work their land will have abundant food, but those who chase fantasies have no sense” (Proverbs 12:12, NIV), “Diligent hands will rule, but laziness ends in forced labor” (Proverbs 12:24, NIV), and “Whatever you do, work at it with all your heart, as working for the Lord, not for human masters” (Colossians 3:23, NIV).   

 

 

Sources:

 

Aaronson, S., Fallick, B., Figura, A., Pingle, J.F., & Wascher, W.L. (2006). The Recent Decline in the Labor Force Participation Rate and Its Implications for Potential Labor Supply. Brookings Papers on Economic Activity 2006(1), 69-154.  doi:10.1353/eca.2006.0012 .

 

Cebula, R. J. (2018). Does a lower (higher) labour force participation rate imply greater (lower) income tax evasion? An exploratory empirical inquiry for the U.S. Applied Economics Letters, 26(5), 429–432. doi: 10.1080/13504851.2018.1486969

 

Mateer, D., & Coppock, L. (2018). Principles of microeconomics. New York, NY: W. W. Norton.

 

Projections overview and highlights, 2016–26 : Monthly Labor Review. (2017, October 1). Retrieved from https://www.bls.gov/opub/mlr/2017/article/projections-overview-and-highlights-2016-26.htm

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