Since the end of 2007, the working-age labor force participation rate (LFPR) has declined. Due to this decline, there are currently an estimated 4.6 million fewer working-age people (aged 16 to 64) in the labor force than would be expected based on past trends.*
While fewer working-age people are in the labor force, an estimated 1.8 million more people in the 65+ age group are continuing to work.
The net change to the labor force from these trends is approximately 2.8 million fewer people working or looking for work.
The decrease in the working age labor force has negative implications for the federal budget, particularly due to rising transfer payment expenditures. Implementing a more pro-growth policy mix that increases the LFPR will help reduce the budget constraint of rising transfer payments.
* For a more detailed review of these trends see:
Eberstadt, N. (2016) Men Without Work.