Friday, January 10, 2014

Are people exiting the Labor Force because they are giving up looking for work or because they are retiring?

One of the variables cited as the reason participation in the labor force has been contracting is "Demographic".  Specifically, baby boomers are retiring and exiting the labor force. No doubt this is happening.

With the latest report (Dec 2013) the Labor Force Participation Rate (LFPR) did take a significant plunge.  This helps to artificially decrease the Official Unemployment Rate.  Even though an inadequate number of new jobs were created, the unemployment rate decreased, mostly because of the decline in the LFPR.

Ok, fine.  I get it.  I am sure we will hear in the coming days one of the major reasons is as I stated above.

The Social Security Administration keeps VERY current data on claims for benefits. So, I went there.

Below is a snapshot, by month for 2013, of the number of people classified as "Retired Worker" who claimed benefits.  In YELLOW I highlighted the last few months.  In RED I calculated the change in claimants from month to month.

Notice the numbers actually DECREASE starting in August 2013.  Surprised?  I am, quite frankly.

Not sure how this contributes to the debate BUT, well, it somewhat calls into question the emphasis the exiting of "the olds" have on the Labor Force Participation Rate.

What do you think???

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