This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Other Factors Add to Decline of Labor Participation

This is not rocket science and we are not pretending to offer a forecasting model here. Rather, we simply suspect that the consensus does not sufficiently deviate from the three-month average private sector job growth of 250,000 to be meaningful.

Participation Rate

The labor market participation rate is the percentage of the working age population that is either working or looking for work. It has been trending lower since the late 1990s. The participation rate in the U.S. has fallen about 2 percentage points from pre-crisis levels (2007) to 64% at the start of the year.

The largest drop since the onset of the crisis has been among the young, those 16 to 24. The Council of Economic Advisors argues in the Economic Report to the President that the enrollment in school explains nearly the entire decline in the labor force participation rate of this age group and about a third of the overall decline in the participation rate.

While the generally soft economic conditions encourage many to go back to school, college enrollment has been rising for more than a decade, but has accelerated in recent years (Chart 1). One recent survey found that 94% of parents want their child to attend college and for good reason.

Parents see through the obfuscation in the media and blogosphere that question the importance of a college education. They see the government's misclassification of household education expenditures as consumption rather than investment.

Investment it is. Workers with college degrees earn, on average, twice as much as those with a high school degree. The premium has been rising since 1980, when it was 45%. Even before the recession, the real earnings of a high school diploma were at 1970 levels, according to one report.

There are other metrics that illustrate the effects of government programs that encourage college education. There has been a marked increase in student loans (Pell) and they have come to dominate the monthly consumer credit report.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs