Low participation rate does not tell the whole story
The WSJ has an interesting story today on the puzzle of the 25-to-54-year-old, male workers in the united States. In 1930, only 2% of them were not looking for work, which has doubled in 1970 and last year, it hit 11.5%.
This is one of the most shocking, disappointing, sad statistic around.
The question is whether they really are not looking for work, or if they take a job if it was a little easier to find, or if she paid a little more. This is a crucial question for the Fed, because of this segment (more than 1 in 10, the first men of the age) is out of the woods and in the work force, it would result in a decrease in salaries and inflation.
The story now focuses on the research of economists at George Mason University who say that these workers are not coming back. Nearly 60% of them declare themselves to be disabled. The rest is explained by male students, housewives, caregivers, and retirees.
For the Fed, it is not really the game so wages should go quickly. If they don’t, it means that the alternatives, such as off-shoring, automation and viscosity are the real culprits.