Question

According to the President's Council of Economic Advisors, the labor force participation rate has significantly declined since the year 2000, due primarily to retiring baby boomers and the severity of the 2007-2009 recession. However, over the past couple of years, the labor force participation rate has held fairly steady, indicating that previously discouraged workers may be reentering the labor market. In June 2017, the labor force participation rate was 62.8%, roughly the same as it was a month earlier.

Source: Andy Kiersz, "Labor force participation ticks up," businessinsider.com, July 7, 2017.

Questions:

Refer to the Article Summary.

1. What is the labor force participation rate? (5 points)
2. What are discouraged workers? (5 points)
3. Explain how discouraged workers reentering the labor market would stop the decline of the labor force participation rate. (10 points)

Answer 1

Ans. 1 Labour force participation rate can be defined as the part of working population in the age group of 16 to 64 in the economy who are in employment or seeking job. People who are still undergoing studies, housewives and persons above the age of 64 are not reckoned in the labour force. According to the June jobs report, the labor force participation rate ticked up to 62.8%, slightly higher than the 62.7% reading in May.

Ans.2   In U.S. a discouraged worker means a person who is not in work force but wants and is available for a employment and who has looked for a job sometime in the past twelve months (or since the end of his or her last job if a job was held within the past twelve months), but who is not currently looking because of real or perceived bad employment prospects.