The popular (well, popular among depressed econ wonks) image of discouraged workers sighing and deleting their Monster.com account once and for all is wrong. The rate of labor force exit is actually lower than it was in the aftermath of the 2001 recession. It’s labor force entry that’s suffered.
In particular, it’s suffered among women — and it’s really suffered among young women – who are a lot less likely to enter the labor force than they were in 2002 and 2003.
That is, in certain ways, a more encouraging trend: Discouraged workers who leave the labor force typically see their skills erode. Young people who delay entry are often staying in school longer, gathering skills that will ultimately prove valuable to them (and student loan debt that will prove burdensome).
But that comforting possibility surely doesn’t explain all of the drop in entry we’re seeing among younger people. And it doesn’t really explain any of the drop in entry we’re seeing among older people.I sure as hell hope that they're gathering skills that will ultimately prove valuable, as opposed to just racking up student loan debt. (If our student was a 5th year graduate student in chemistry (certainly not the median student), another year would not really add all that much in skills.)
We are all impacted by the Great Recession, but I fear that it is the young people (folks under 33 or so) that have been affected the most by the relatively poor job recovery. Best wishes to them, and to all of us.
*Short explanation: the labor force participation rate is a measurement of the number of people who are working or seeking work ("in the labor force") compared to the total population. If you're a student or retired, you're not counted in the numerator. Since the Great Recession, the labor force participation rate has fallen from 66% to 63%. Some of this can be attributed to the aging of the American labor force (i.e. people retiring), but a lot of it cannot -- and economists debate the reasons why.