Nonsequitur: Half a Million People Drop Out of the Workforce

April 5, 2013

The good news is at unemployment crept down to 7.6%, the lowest in 4 years.  The bad news is why.  Only 88,000 new jobs were created in March.  But 496,000 left the workforce.  Some retired.  Some just gave up looking for a job. (Source: US Dept. of Labor)

If this trend continues, and it probably will, it will have serious consequences for the US economy.  While this should encourage the hiring of replacement workers (good news for job seekers), it means a larger % of the population will not be “producing,” not paying income taxes, not making purchases associated with “workers” (like transportation costs for commuting, childcare costs, etc.), and instead will be drawing on government services such as Medicare and/or welfare.

Much of President Obama’s plans to “stimulate” growth won’t work if the workforce diminishes.  Despite his plans for home ownership, retirees don’t buy homes; they sell them.  His plans to improve transportation infrastructure with highway repairs and super-trains will mean nothing if there are fewer commuters to use them.  And Obamacare’s promise to reduce healthcare costs primarily rests on employers providing more coverage to more workers while individual families carry the costs for “children” and other members not working  But this will not apply to retirees or the long-term unemployed.

Replacing exiting workers is not enough to grow our economy or address our bankrupt public pensions or manage our failing entitlements or begin paying off our massive public debt.  We desperately need new workers in new jobs stimulating more buying and investing which leads to more new jobs and new hiring, etc.  The President’s plans won’t get us there.

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