Republican Critique of Obama Recovery Misses Target

Jul 15, 2015
Press Release
Labor Force Participation Decline Pre-Dates Obama, Driven by Other Factors

WASHINGTON – The nation’s labor force participation rate has been declining for several years, in large part due to the retirement of baby boomers, Joint Economic Committee (JEC) Ranking Member Carolyn Maloney (D-N.Y.) said Wednesday.

At a JEC hearing to examine how the flagging labor force participation rate reflects the health of the economy, Maloney said Republicans use the 62.6 percent labor participation rate to exaggerate ongoing challenges in the labor market.

“My Republican colleagues opposed many of the measures that helped reverse the economic freefall,” Maloney said. “They predicted dire consequences. But those predictions have been proven wrong. Now they are left with the weak claim that good job numbers aren’t really good news. Economists are concerned about the declining labor force participation rate, but much of this decline is structural and it long pre-dates the Obama administration.

Republicans “ignore that the labor force participation rate for men has been falling since the early 1950s, while the participation rate for women has been falling since 2000,” Maloney said. “The decline in labor force participation is largely driven by demographics – principally, the retirement of the baby boomer generation.”

The Council of Economic Advisers estimated that fully half of the 3.1 percentage point decline in labor force participation from fourth quarter of 2007 to second quarter of 2014 was due to the aging of baby boomers.

Another reason for the decline in the labor force participation is the declining number of young people in the work force. But young people are working somewhat less for a perfectly good reason – they are going to college. In 1970, less than a quarter of 20 to 24-year-olds went to college. By 2013 that number had climbed to nearly half, according to Bureau of Labor Statistics and Census Bureau data.

“Let me say something that we should all agree on,” Maloney said. “We need to build an economy that creates enough good-paying jobs to keep more men and women in the labor force.”

The Congresswoman offered a number of legislative remedies which would help increase labor force participation:

  • Investments in infrastructure, rebuilding roads and bridges, creating good-paying jobs and improving U.S. competitiveness.
  • Enactment of family-friendly workplace policies that will boost employee retention, lift worker morale and can increase participation in the workforce.
  • Immigration reform. According to the CBO, the bipartisan immigration bill passed by the Senate in 2013 would have increased the labor force by 6 million workers (3.5 percent) in 2023 and 9 million workers (5 percent) in 2033.
  • Expansion of the Earned Income Tax Credit (EITC), an initiative that has proven to boost the labor force participation rate among low-income workers.
  • Enactment of a second-earner tax credit, like the one President Obama has proposed. This would help 24 million families, in which both spouses work, offset the costs of commuting and child care, making it more financially attractive for the second earner to remain in the labor force.

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See related charts here: https://1.usa.gov/1CDYXfM

 

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