Last Friday, new data was released that showed U.S. labor force participation rates last month were the lowest they’ve been since 1979. Those numbers are a bad sign in an economy with a growing aging population.
Analysts say that the large number of American workers who joined the ranks of Social Security during the recession and in its wake now threaten to cost the economy of tens of billions of dollars per year in lost wages and decreased tax revenues. The dwindling of the labor force, it is said, will have far-reaching economic consequences.
The data released last Friday showed that the nation is at a four-year low of 7.6 percent in terms of unemployment. Usually, that signals job growth, but in the present context it is an indication that more workers are leaving the workforce. Economists say that is a problem that could continue, as not many are going to be willing to give up their disability checks for paychecks.
Many of those who are newly enrolled in the disability roll are low-wage earners with limited skills. These are the folks that are likely to be unwilling to give up a degree of economic security for a job market that continues to be poor.
Since the recession, more people have gone on disability than new workers have joined the labor force. It is estimated by some that this is costing roughly $95 billion per year. In recessions gone by, workers dropped out of the labor force but would return when the economy picked up again. But instead of expanding, the proportion of workers has fallen 63.3 percent, according to the recent statistics.
The Social Security Administration does have a program for disabled folks looking to get back into work. In out next post, we’ll take a look at this program.
Source: Wall Street Journal, “Workers Stuck in Disability Stunt Economic Recovery,” Leslie Scism, Jon Hilsenrath, April 7, 2013