US: Harder for the jobless rate to decline much further - NBF

Krishen Rangasamy, analyst at National Bank Financial, notes that the US labour force participation rate has declined sharply since 2000, hurting economic growth in the process.

“Over the years, economists have put forward various possible explanations for this phenomenon including retirement of baby boomers, increasing college attendance among the youth, inadequate child-care policies, higher incarceration rates and poor health. Since 2014, the overall labour force participation rate has stabilized near 63%, coinciding with improving health outcomes. According to the 2018 Annual Statistical Report on the Social Security Disability Insurance Program the number of disabled workers, which peaked at almost 9 million back in 2014, has fallen for four consecutive years. Part of decline can be attributed to workers under the age of 50 taking pain medication. Re-entry into the labour force of previously disabled workers explains in part the observed stabilization in prime-age participation. While positive for economic growth, rising participation also means it will be harder for the jobless rate to decline much further.”