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The prime-working-age labor problem

Data: Bureau of Labor Statistics; Chart: Chris Canipe/Axios

It's puzzling that so many prime-working-age Americans have withdrawn from the workforce. And the government forecasts that the problem is going to get worse.

The big picture: From a peak in the dot-com years of 1997–2001, the workforce participation rate for those 25–54 has steadily fallen, but the participation rate in this group actually has gone up since September, as the sizzling economy pulls long-term unemployed people into the job market, says Andrew Chamberlain, chief economist at Glassdoor.

Yes, but: In the coming years, the BLS expects the rate to go back down.

  • In 2022, the BLS forecasts, 81.1% of people aged 25–34 will be working or seeking work, down from 83.7% in 1992; the rate will drop to 81.8% among those 35–44, from 85.1%; and to 79.9% from 81.5% for those 45–54.
  • Overall for those 25–54, the rate drops to 81% from 83.6% in 1992.

Be smart: Among the reasons for dropping out of the workforce are drug use, a felony conviction and a lack of skills after a long bout of unemployment. But in a paper last year from the Kansas City Fed, economist Didem Tuzemen also blames "job polarization" — a decline in demand for low- and middle-skill jobs, thus forcing people in these age categories out of the workforce.

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