Contact us
CALL US NOW 1-888-GOLD-160

Why Have So Many People Dropped Out of the Labor Market?

  by    0   0

Why is there a labor shortage in the US?

In a nutshell, a lot of people have simply dropped out of the labor market. They’re not working.

But why?

In December, I wrote about the fact that the jobs reports put out by the Bureau of Labor Statistics are hinky. While the BLS reported the economy added 2.69 million jobs between March and November 2022, there were only 12,000 more employed people in November than there were in March.

In other words, most of the increase in jobs is the result of people taking on second and third jobs in order to make ends meet as prices continue to climb through the roof. These “new jobs” do not reflect unemployed people going to work

A Prudential Pulse survey bears this out. It showed that 70% of all workers have pursued or considered pursuing gig work to supplement their income over the past year.

Meanwhile, the labor force participation rate is at a paltry 62.3%. That means there are a lot of employable people who aren’t working or even looking for a job. Keep in mind, unemployed people searching for work are included in the labor force participation rate.

And it’s not just older people who retired early. In December 2019, the labor force participation rate for people ages 25-54 was 82.9%. As of December 2022, it had fallen to 82.4%. That half-percent drop represents about 636,000 people who just never went back to work after the pandemic.

That explains the labor shortage.

But why aren’t people working? And how can they afford not to?

Over at MishTalk, Mike Shedlock argues that the falling labor force participation rate is primarily a function of government disincentivizing work. He lists eight reasons fewer people are engaged in the labor force.

  • Rent moratoriums
  • Expanded Medicaid
  • Increase in food stamps allocations
  • Some of the pandemic “free money” shotgun blast still not spent
  • Canceled or postponed student debt
  • Abandoned plans for the American dream of owning a home
  • Fentanyl and an opioid crisis
  • Covid deaths, long-covid effects, and lingering emotional scars from a Covid lockdown.

As Shedlock points out, “All of the above reasons reduced the marginal propensity to work. And it’s very inflationary.”

In other words, incentives matter. And the incentives right now are to stay at home and watch Netflix.

Notice that all of these factors are either direct or indirect results of government policies.

An aging population is also driving down labor force participation. Boomers are retiring in mass and many in Gen-X are starting to contemplate retirement and have cut back hours. Shedlock says they are being replaced by Zoomers who have lower skills and want to work fewer hours.

This further underscores the fact that despite all of the breathless reporting to the contrary, the labor market is not nearly as strong as the mainstream media would have you believe.

Gold Scams Free Report

Get Peter Schiff’s most important gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Silver Jewelry Sales Boom Will Help Drive Overall Silver Demand Higher

Jewelry production is an important driver of overall silver demand. In 2022, the amount of silver used in jewelry was up around 29% as overall silver demand hit record levels. Silver jewelry production used around 235 million ounces of silver. And according to a recent survey by the Silver Institute, silver jewelry sales are on […]


Chinese Gold Demand Continued to Surge in February

After ending 2022 on an upward trend that continued into January, Chinese gold demand surged again in February as the economy continues to rebound from government-imposed COVID policies. Gold withdrawals from the Shanghai Gold Exchange (SGE) totaled 169 tons in February. This is a reflection of strong wholesale demand and signals an ongoing rebound in […]


The Exploding Budget Deficit Is Another Big Problem for the Federal Reserve

February has historically been a big budget deficit month, but the Biden administration still managed to overachieve and run the second-largest February deficit ever. The only time the US government has run a February deficit bigger than the $262.4 billion shortfall last month was in February 2021 in the midst of the COVID stimulus. This […]


India’s Oil Deals With Russia Further Erodes Petrodollar Dominance

Every government policy has consequences – some intended and some unintended. There is at least one serious unintended consequence of the economic sanctions levied against Russia after its invasion of Ukraine – an erosion of the US dollar dominance.


Credit Card Borrowing Spiked in January Even as Big-Ticket Spending Slowed

In January, retail sales came in much hotter than expected. Now we know how consumers paid for the spending spree. They put it on credit cards. After slowing modestly in December, growth in revolving debt spiked again in January. But a slowdown in non-revolving credit moderated the overall increase in consumer debt. Overall, this signals […]


About The Author

Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It's Your Dime interview series.
View all posts by

Comments are closed.

Call Now