The proportion of U.S. adults who are “in the labor force”–that is, who either have jobs or are unemployed and looking for a job–has been falling for a decade, as I explored in an April 26, 2012, post on “Falling Labor Force Participation.” But for one demographic group, the elderly, labor force participation is rising substantially.
He cites a Census Bureau Study. This is a two-decade trend, and I think that the most plausible explanation is better health for those in the 65-75 age bracket.
Why are Americans working less? While there are a number of factors, the phenomenon is due mainly to a variety of public policies that have reduced the incentives to be employed.
He goes on to cite increased use of food stamps, disability, Pell Grants, and extended unemployment benefits.
I might dub this the non-WPA. Paul Krugman and others talk about reviving the Works Progress Administration, which built public works projects in the 1930s. But would anybody even take those jobs today? With all the other options to get by without working, how many people would be willing to travel to the site of a government construction job and pick up a shovel?
Andrew G. Biggs and Jason Richwine write,
the average federal worker shifting to a private job actually accepts a small salary reduction of around 3 percent. Similarly, private sector workers who move to federal jobs don’t take a pay cut. They get a first-year raise averaging 9 percent, well above the raise other workers get when they switch jobs within the private sector.
The authors suggest that this is evidence that public sector workers are not underpaid. Can we interpret it any other way? Perhaps public sector work has an unobserved “pain factor” that requires a compensating differential?
Other data that would be interesting would be data on job applications. Is there a flood of applications for private sector jobs coming from the public sector? How does it compare with the amount of applications going the other way?