The Decline In Prime Age Labor Force Participation: The Smoking Gun (Part 2 Of 2)

– Written by New Deal democrat

The decline in prime age labor force participation: the smoking gun (part 2 of 2); comparing June Cleaver and Roseanne Conner

I recently wrote about the compelling evidence that the biggest reason for the decline in the prime working age labor participation rate was the “child care cost crunch,” i.e., the increase in the number of second-earner spouses who decided to stay at home and raise their children, occasioned by the particularly significant decline in wages among lower quintile jobs, together with the soaring costs of outside day care.
In my post yesterday, I showed that the biggest reason why the percentage of both mothers and fathers of minor children who have dropped out of the labor force has increased, is in order to care for their children — not discouragement, not disability, not education, and not any other reason.

But that is not the end of the story, even though over 80% of men and women eventually become parents of minor children. In particular, there are other studies which put the spotlight on an increase in disability claims. In particular, the Atlanta Fed went to the trouble of decomposing the monthly data as to why people aren’t in the labor force over the last 16 years. The graphs are interactive, and illuminating.

To cut to the chase, the Atlanta Fed found that the single biggest reason for the increase in labor force non-participation was disability claims:

A similar graph was compiled in a separate report:

So that’s it, the real reason for the increase isn’t the “child care cost crunch” but disability, right? Well, yes and no. To see why, let’s go into the Atlanta Fed’s interactive database a little more closely.

At age 50 and above, there has been an outsized increase in the percentage of labor force participants who say they are disabled. That is the lion’s hsare of the increase in disability claims: