Stories

Americans are staying out of the labor force for lack of benefits

Free market enthusiasts often point to Europe's relatively high unemployment rates as evidence that their more activist labor laws, like mandating paid leave, sick time, and more generous unemployment benefits make it too expensive for employers to create jobs.

But according to a new analysis from the Federal Reserve Bank of New York, America's lack of workplace benefits may be causing the U.S. prime-age labor force participation rate — or the share of able-bodied workers aged 25-54 who either have a job or are actively looking for one — to lag behind European competitors.

Data: OECD; Chart: Andrew Witherspoon / Axios

What they're saying: The New York Fed economists point to data that shows "the failure of the United States to keep pace in providing more generous workplace benefits accounts for 29 percent of the decline in the nation's labor force participation rate for women relative to that of other high-income countries."

Why it matters: The unemployment rate is at an historically low 4.3%, but despite the obvious demand for labor, participation rates have only inched up slightly since the worst of the recession. This report suggests one reason employers are having trouble drawing Americans back into the labor force is a dearth of paid leave and other benefits that would enable Americans to both take care of their families and work at the same time.