Analysis | Mysteriously large piece of Gen Z doesn’t work –

Analysis |  Mysteriously large piece of Gen Z doesn’t work –

Despite impressive employment growth over the past 22 months, the labor force participation rate in the United States is still 1.1 percentage points – or about 1.8 million people – higher than on the eve of the February 2020 pandemic. .

The labor force participation rate is the ratio of Americans over the age of 16 who have a job or actively seek employment divided by the population over the age of 16. (Soldiers in uniform and those in prisons and other facilities are excluded from both sides of the equation.) Vs. – This is a phenomenon that requires both an explanation and an explanation of the strange facts happening in the job market these days. . .

Part of what’s happening is that as Americans age, senior members of the giant Baby Boom cohort will turn 76 this year. Economists Jason Furman and Wilson Powell III estimate that a 0.3 percentage point drop in labor force participation from February 2020 until the aging population can be considered chalk.

However, this still leaves a gap of 0.8 percentage points and there are some interesting variations between the age groups that could help explain this. A mixed-month comparison can be misleading, as the Bureau of Labor Statistics doesn’t adjust all age numbers for seasonal factors, so the number of open positions in February posted last week gives you a good chance to review what’s changed. recent. epidemic in February 2020.

The general pattern predicts smaller losses, including those in the early years of their career, and larger losses for those closer to the beginning and the end. 45 to 54 is a big exception and I admit right away that I don’t know what’s going on there. The decline in group workforce participation is concentrated in people aged 45 to 49 for both men and women and appears to be unrelated to a population adjustment made in January by the Bureau of Labor Statistics to fill in the US 2020 results. Disclosure (ie no big drop from December to January). Maybe a disaster, maybe not.

The drop in attendance for the over 65s is not accidental and a lot has been written about them. More dangerous for seniors, the pandemic, coupled with booming prices for assets benefiting from retirement savings and equity, has still prompted many Americans aged 65 and over to retire.

Some of these people will retire if the threat from Covid-19 continues to decline and the labor market continues to grow, but the participation of the 65 to 74 workforce has been so great that it’s hard to see the gap narrowing rapidly. . Those in the late 1950s and early 60s are less likely to lose the workforce of any age group, so the best hope may be to wait for (or should I say, for my group to continue). Between the end of the 60s and the beginning of the 70s.

That leaves the young.

The massive increase in labor force participation between 16 and 17 comes after a decade of decline and coincides with the risk of desperate employers that inexperienced adults are (rationally) less anxious than adults. Take Covid to work. The steep drop between ages 18 and 19 is odd and doesn’t match other evidence, such as the drop in two-year college enrollments. The BLS seasonally adjusts participation rates for both groups, as well as for young people ages 20 to 24, so it’s possible to see their trajectory during a pandemic. The 18-19 series obviously skipped a lot, so I haven’t read much about the last straw.

Labor force participation in these 20-24 years has followed a more stable line. It was growing, but it was still far below the pre-pandemic rate. Explaining this and the minor but still significant drop in attendance in the late 1920s and early 1930s has made it something of a craft industry over the past year.

Much of the talk was based on a change in attitude towards work, which has been variously described as “big resignation” or “deceit”, but that was mostly the evidence. (Joseph Briggs, a Goldman Sachs economist, proposed a diagram showing increased activity on the r / Antiwork subreddit, for example.) And although there is ample evidence that addressing childcare during a pandemic has left many women out of the picture. workforce. In their early twenties, women’s chances of conceiving are much lower than before.

My theory, based on little evidence, is that the pandemic, and in particular the complete closure of the spring and summer of 2020, is very devastating for young people who graduate and enter the labor market, and it takes a long time. to figure it out on. On the hill. Clearing the first path in a career isn’t normally easy and blocking it completely will take months to take effect.

I tried this explanation on several economists from job seekers and came to an agreement. “Basically, it was a mandatory gap year,” said Nick Bunker, director of economic research at Indeed Hiring Lab. “Things were very uncertain. “There was mass unemployment for jobs that didn’t require a degree.” Daniel Zhao, chief economist at Glassdoor Economic Research, pointed to the sharp rise in average wages for young people aged 16-24 (10.6% in the 12 months ending January, according to the Federation’s Wage Growth Watchdog) as a benchmark. Atlanta). To both of them. Shortage of young workers and, more positively, “Avoiding some of the devastating effects of the Covid recession on new young workers in the world of work”.

The end in the midst of a past recession had a negative impact on profits that lasted for decades. The reversal of the Covid-19 recession was so rapid that scarring could have been avoided in the long term, but posed a risk to the hundreds of thousands of young Americans who have not yet entered the job market.

This column does not necessarily reflect the views of the editors or Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion commentator looking after the business. He was editor-in-chief of the Harvard Business Review and has written for Time, Fortune and American Banker. He is the author of The Myth of the Rational Market.

Source: Washington Post