The Incredible Shrinking Labor Force
The U.S. population is growing at an average rate of a little more than 1% per year. It is reasonable to expect that the labor force should also be growing. However, the civilian labor force has declined on year-to-year basis three different times in 2009. See the following graph.
The year-over-year change in the labor force was negative in January, July and August 2009. This is the first time this has occurred since the 1950s and early 1960s. In those years, Korean War and pre-Vietnam War military needs were producing high draft levels, which had a negative impact on the civilian labor force until the number of women in the labor force started to increase more rapidly.
Declining Labor Force Growth
There is a well-defined downtrend in the growth of the labor force starting about 1970. It may not be obvious when first looking at the noisy data of the graph above, but when the same data are smoothed using 12-month moving averages combined with trend lines, the declining labor force growth rate is very evident. See the following graph.
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