The Agenda

Brad Plumer on Labor Force Participation

Brad Plumer has a good post on labor force participation; the only change I’d make is that I’d have made reference to SSDI.

And though Brad offers a good discussion of the demographic drivers of shrinking labor force participation, I find argument from demographics at best incomplete. The population has certainly aged, yet healthy lifespan has increased. Older workers are leaving the labor force in part because, as Andrew Biggs has argued, the Social Security payroll tax is a much stronger work disincentive for the old than it is for the young. Low levels of labor force participation stem from long-term policy failures that can’t be attributed exclusively to President Obama or President Bush. Highly inefficient human capital expenditures have led to a sharp slowdown in the improvement of the skill level of the workforce and a poorly structured Social Security system discourages labor force participation on the part of older workers and secondary earners. 


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