Why Is The Labor Force Participation Rate Declining?

Why Is The Labor Force Participation Rate Declining?

The labor participation rate peaked in early 2000 with 67.3%. The rate steadily decreased in the mid-2000’s and then plummeted during the financial crisis. Unfortunately, even as there has been solid job growth as our nation slowly removes itself from the recession, labor participation continues to decrease. This is due to multiple factors that include an aging population in the U.S. and a decrease in “prime age” (ages 25-54) workers actively employed or seeking employment. A recent study conducted by the White House’s Council of Economic Advisors found that relatively uneducated men are primarily the ones who are leaving the labor force during their best working years. So, what are the best ways to increase labor participation? Labor experts see policies such as the Child Tax Credit or the Earned Income Tax Credit as incentives to re-enter the labor force and search for employment.

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