Sunday, August 4, 2013

Coming and Going: The number of retirees exiting the labor market is greater than the number of people entering the labor market. This can't be good, can it???

Highlighted above are the number of "Retired Workers" (only) in January 2012 and in June 2013. If you subtract the two, this will give you the number of people who officially retired and may or may not have left the workforce between those two dates.  I will presume they left the work force for this exercise.

37,504,073 minus 35,752,299 = 1,751,744.  To get a monthly average, divide that by 18.

This means 97,320 people, on average, are exiting the labor force each month to retire.

From January 2012 the Labor Force went from 154,356,000 to 155,798,000 (see highlighted numbers below) ---an increase of 1,442,000.  To get a monthly average, divide by 18.  The Labor Force is the sum of the number of employed PLUS the number of unemployed, as defined by the BLS.

Source: BLS
Divide that by 18 months and the average increase in the labor force each month was 80,111.

This means 80,111 new people, on average each month, entered  the Labor Force in the past 18 months.

Just using these two major pieces of data on labor market movement, we can easily see more people are exiting the Labor Force, on net, than are entering.

This is one of the contributing factors to the decline of the unemployment rate in the past 18 months. The job creation alone we have experienced is not enough to credit the decline.

I hope this helps provides some clarity regarding this important issue.
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