(Editor’s note: while Don is out of the office, please enjoy this guest editorial.)
“I think one of the tremendous opportunities that we’re seeing because the economy is so strong is that people who have been out of the workforce are coming back off the sidelines… And this is something we’re working incredibly hard to incentive, because there is a large population of prime-age men and women who are out of the workforce, and who are now slowly starting to return. And we’re seeing that.”
That was Ivanka Trump, daughter of and senior advisor to President Donald Trump, talking about the state of the U.S. economy and labor markets on Fox Business on July 1.
For that, she was excoriated by groups on left. For example, the Center for American Progress published a hit piece by Aaron Rupar entitled, “Ivanka Trump makes bogus claim about labor force participation rate.”
There, Rupar wrote, “Ivanka’s comment might lead you to believe that the labor force participation rate — a statistic which tracks the percentage of people 16 and over who are actively seeking work and employed — has gone up since her father took office in January 2017. But that’s not the case. According to data from the Bureau of Labor Statistics, the labor force participation rate has actually fallen from 62.9 percent in January 2017 to 62.7 in May of this year.”
Specifically, Rupar is referring to the labor participation rate — that is, those working or looking for work — from the age of 16 and over. His numbers are correct, but here’s the thing. They tell you almost nothing about the state of labor markets specifically because they include senior citizens over the age of 64 including tens of millions of Baby Boomers who have been retiring en masse. That includes people in their nineties, for goodness’ sake.
To put the retirement exodus into perspective, consider that seniors have grown as a percent of the 16+ population from 15.7 percent in 1997 when labor participation peaked to almost 19.8 percent so far in 2018. The more retirees there are as a percent of the adult population, the lower labor participation goes.
This was a major driver of the drop in labor participation that began with the dotcom bubble popping, no question, but so was the exodus by working age adults.
That is why to get a more accurate picture of labor participation, you need to subtract out the seniors. Which is exactly what Trump is doing. To wit, she stated, “there is a large population of prime-age men and women who are out of the workforce, and who are now slowly starting to return.”
And here, Ivanka Trump is absolutely right. What she says is undeniably true. We should not be counting retirees as akin to job losses. They are not the same.
Among 16-to-64-year-olds — which are prime working years for Americans — labor participation has jumped to 73.52 percent so far this year as the average between Jan. 2018 and June 2018, or up to 74.26 percent in June, on an unadjusted basis in the latest jobs report, utilizing data from the Bureau of Labor Statistics.
That’s up from an average of 72.95 percent in 2016 when President Trump stood for election, and using the present numbers from June, represents almost 3.4 million working age adults who have entered the labor force, far outpacing the population growth of that demographic, which has grown by 938,000.
That followed a long decline of labor participation among working age adults all the way back to 1997, when participation peaked. That year, labor participation among those aged 16-64 averaged 77.37 percent. Throughout the Bush and Obama administrations, labor participation among working age adults worsened almost every single year until the figure finally bottomed in 2015 at 72.61 percent. It looked like a lost generation.
If labor participation among 16-to-64-year-olds had remained what it was in 1997, in 2016, there would have been 9 million more Americans in the overall labor force numbers. Today, that figure is down to just 6.4 million.
Put another way, when President Trump ran for office in 2016, there were almost 55.6 million Americans aged 16 to 64 out of the labor force. Now there’s just 53.1 million through June, a decrease of 2.5 million, even as the population of that demographic has increased by 938,000.
We’re not out of the woods yet, but this still all represents a tremendous improvement.
To be fair, these numbers are not so easy to just look up. You have to manually pull the unadjusted data from the Bureau of Labor Statistics for 16-year-olds and above and subtract those 65 years old and older from the total to get good numbers for 16-to-64-year-olds. But once you do, you get a compelling picture that even as Baby Boomers have retired en masse and overall labor participation has dropped, in the past three years, there has been a major recovery under way for working age adults.
For those who quibble that I used the seasonally unadjusted numbers, if and when the Bureau of Labor Statistics publishes the seasonally adjusted numbers broken down by age including those aged 55 years old and older, I’ll use those. Until then we must rely on the seasonally unadjusted numbers to learn more about working age adults.
Again, to put a fine point on it: Labor participation among working age adults aged 16 to 64 has increased throughout President’s Trump term of office from an average of 72.95 percent in 2016 to an average of 73.52 percent so far in 2018.
This is historically great economic news. And not just for the Trump administration, which undoubtedly deserves the lion’s share of the credit for cutting individual and corporate taxes, removing regulations and fighting for better trade deals and jobs for the U.S. economy. Mostly, this is great news for the American people.
Ivanka Trump is right. Working age adults who have been on the sidelines are returning to the work force and participating in the economy. The numbers are moving in the right direction. That should be something to celebrate, not present a moment for partisan sniping. Ivanka Trump’s opponents should be taking notes, they might learn something, for it is the Trump administration that is once again ahead of the curve.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.
