Welcome Back, Carter! Labor Participation Drops to 1978 Levels.
The unemployment rate may have ticked back up to 7.3 percent, partially reflecting furloughed federal workers, but more concerning is that the share of the population actively looking for work dropped to Carter-era levels. That's right, the labor participation rate in October was down to 62.8 percent, a rate that hasn't been seen since March of 1978. (Note: Reason's Ron Bailey noted this blast from the past just a few days ago.)
I doubt that anybody has a full explanation as to why labor participation is on such an impressive downward streak, reflecting Americans effectively dropping out of the workforce. Retiring Boomers (PDF) have been fingered as a contributing factor, but some research shows the old hippies hanging on to their jobs by their fingernails, even as younger workers disproportionately drop out. A Cato Institute study released in August suggests that, with the weak job market, some efforts to cushion the blow of the lousy economy are actually counter-productive because "The current welfare system provides such a high level of benefits that it acts as a disincentive for work." Taking benefits may be a tad more attractive than trying to assemble a couple of Obamacare-dodging part-time gigs into a living.
Whatever the explanation, welcome back, Carter.
