Page 6 - ISO April 2023
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       Labour Force Participation: Where Did the

       Workers Go?

        Eugenio J. Alemán, PhD, Chief Economist, Raymond James
        Giampiero Fuentes, Economist, Raymond James

        UK editors note: Whilst necessarily US-centric we repro-
        duce this interesting analysis as many of the themes   As of August 2021, there were slightly over 2.4
        contained within pertain also to the UK and other devel-  million excess retirements due to COVID-19,
        oped global economies more generally.                  which is more than half of the 4.2 million people
                                                               who left the labour force from the beginning of
        Labour force participation refers to the percentage of the   the pandemic to the second quarter of 2021.
        population who are either employed or actively seeking
        employment. Overall, labour force participation has   is, higher real wages incentivised workers to join the work-
        declined in the US over the past several decades.   force and brought labour force  participation up slightly.
        Labour force participation for men has been steadily   The COVID-19 pandemic caused a significant drop in labour
        declining since the 1960s, and only the staggering number   force participation, but the US labour force is still 0.8%
        of women joining the workforce has allowed labour force   lower than what it was pre-pandemic, so where did all
        participation to increase over the years. Labour force par-  these people go?
        ticipation peaked at 67.3% in 2000, when women’s
                                                            There are many hypotheses surrounding the whereabouts of
        participation also peaked, and steadily declined until 2015,
                                                            the missing workers, and it’s unlikely that economists will have
        when real wages and salaries seemed to have worked their   a more precise answer for years to come. However, we believe
        magic to bring more individuals into the labour force. That   that most of these missing workers are a combination of early

        6  Endnotes are listed on Page 20.
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