By Mac McLean

The Bulletin

Fewer Americans are working or actively looking for work now than at any other point in the past 36 years, according to a recent report from the White House Council of Economic Advisors.

The council attributes the situation to lingering effects of the Great Recession and to the country’s 37 million baby boomers getting ready to retire.

According to the report, the country’s labor force participation rate dipped to 62.8 percent during the second quarter of this year, the lowest participation rate since 1978. The past quarter’s participation rate is 3.1 percentage points lower than it was during the fourth quarter of 2007.

Oregon’s labor force participation rate fell from 63.7 percent in the fourth quarter of 2007 to 60.5 percent in the second quarter of 2014, according to the Oregon Labor Market Information System, while the Bend Metropolitan Area’s participation rate fell from 64.6 percent to 58.4 percent.

“We estimate that the aging population is responsible for … half of the total decline (since 2007),” council chairman Jason Furman said in a July 17 presentation about his findings. He said the rest of the national drop was due to the current economic cycle (0.5 percentage points) and some impacts of the recession that were not fully understood (1 percentage point).

One of the most widely used and, according to Furman, most widely misunderstood economic indicators, labor force participation rates measure the percentage of Americans who are 15 or older and either have a job or are looking for work.

Increasing participation rates can signal a strong economy where everybody who wants a job has one or is confident enough in their ability to find one. Decreasing rates can signal a time of economic malaise where people who don’t have a job are so disappointed with their prospects that they give up looking for work.

Decreasing participation rates can also be the result of perfectly natural phenomena such as people leaving the labor force so they can go to college/graduate school, raise small children at home or retire. Furman said these phenomena, particularly the boomers’ retirements, are responsible for participation rate’s dip more than anything else.

He said the dip started about the time the oldest boomers became eligible for their Social Security benefits — people can receive their benefits at a reduced rate when they turn 62; full benefit payments do not start until a person is 65 — and continued even as the economy started to improve.

“While the unemployment rate and a range of other indicators are coming down and are on track to return to precrisis rates, the participation rate is a different story,” Furman said in his remarks to the Brookings Institution. “It has fallen over the course of the recovery … even though the unemployment rate has come down sharply.”

Furman said that because of the retiring boomers, he does not think the labor force participation rate will ever return to its precrisis levels. Economists predicted these retirements would cause a considerable dip in the participation rate — one that would last until the youngest boomers retire in 2029 — long before the financial crisis and the recession occurred.

But Furman warned the fact the participation rate’s drop was foreseen and unavoidable does nothing to soften its impacts, particularly when it comes to programs such as Social Security and Medicare — if fewer people are working, then fewer people are paying the payroll taxes that fund these programs — that many people depend upon when they retire.

That’s why he called on the government to move forward with initiatives that would make it easier for older people to stay at their jobs longer if they wanted to and for younger people and particularly women to continue working at their jobs while spending time with their children at home.

He also called for a comprehensive solution to the country’s immigration problem, noting that the Senate-approved measure would make it possible for 6 million immigrants to join the labor force as taxpaying employees over the next 20 years. That alone could increase the country’s participation rate by 0.7 percentage points.

— Reporter: 541-617-7816,