2006 Labor Force Projections Anticipated Only +/- 24% Of Decline

[NCR85]

The following graph plots labor force participation rates by BLS economist Mitra Toossi in November 2006 with new projections for the participation rate as of January 2012:

1/1/2006	66.2	66.2
1/1/2007	66.0	66.1
1/1/2008	66.0	66.1
1/1/2009	65.4	66.0
1/1/2010	64.7	65.9
1/1/2011	64.1	65.8
1/1/2012	63.7	65.6

76% of Decline In Participation Rate Since 2006 Was Unexpected

The current participation rate is 63.7. In 2006, Toossi estimated the participation rate would be 65.6, a drop of .6 percentage points from 66.2. Instead, the participation rate fell by 2.5 percentage points.


Mathematically, 76% of the decline since 2006 was "unexpected" (1.9 of 2.5).

http://globaleconomicanalysis.blogsp...icipation.html

Does this mean that 76% of the labor force decline is the result of cyclical factors and should as such be interpreted as discouraged workers?

How high would U-3 unemployment be if these were counted among the unemployed?

[NCR85]

Re: 2006 Labor Force Projections Anticipated Only +/- 24% Of Decline

It's too bad this message didn't get any responses. Am I the only one who realizes the immense significance of this?

This data shows that the suspicion you might get from employment/population ratio data that there has been virtually NO improvement in labor conditions in the US since 2009 is correct. If the decline in labor force participation could not be foreseen, what other factor do we have to attribute it to than the recession? And if the recession brought about these labor force dropouts, people who would otherwise still be happily engaged in work, why shouldn't they simply be counted as unemployed? These are not your ordinary baby boomer retirees. Only 24% of them are.

U-3 is around 10% when the adjustment is made. An awful number not at all befitting of the term "recovery".

Another thing: is there even any indication that wages are downwardly flexible even in the long run when this is taken in account?