Question

The Labor Market: Definitions, Facts, and Trends

21. Suppose that the population aged 16 or over in the United States could be categorized as follows

Not in the labor force (N) = 75 million,

Employed (E) = 115 million,

Unemployed (U) = 10 million.

21d. Compute the labor force participation rate for this economy?

21e. By historical standards, would your answer to 21d represent a relatively high labor force participation rate?

21f. What has been the general trend in the labor force participation rate in the United States since 1950? Has the trend been the same for men as it has been for women?

21g. What has been the general trend since 1950 in the type of work Americans perform?

Answer 1

d) Labor Force Participation Rate

= Total Labor Force / Total Population Eligible to Participate in Labor Force * 100

Total Labor Force = Total Employed + Total Unemployed

= 115 + 10 = 125 Million

Total Population = 115 + 10 + 75 = 200 Million

Labor Force Participation Rate = 125 / 200 * 100

= 62.5%

e) Labor Force Participation Rate in the United States averaged 62.88 percent from 1948 until 2020, reaching an all time high of 67.30 percent in January of 2000 and a record low of 58.10 percent in December of 1954.

So, we can say that the above calculated figure is depicting Average Labor Force Participation Rate neither too high nor too low.

f) As mentioned earlier Labor Force Participation Rate in the United States averaged 62.88 percent from 1948 until 2020, reaching an all time high of 67.30 percent in January of 2000 and a record low of 58.10 percent in December of 1954. It has almost remained same at the average rate of 62.88%. However, in 1954 it reached the lowest at 58.10% and in 2000 it was the highest at 67.30%

In the United States, 57.1% of women were in the labor force in 2018, compared to 69.1% of all men. The rate of women’s participation peaked in 1999 at 60.0%. In the United States, 61.9% of all mothers with children under the age of three were in the labor force in 2018. In United States in April 2019 the labor force participation rate for working parents with children under the age of 18 was 71.5% for mothers and 93.3% for fathers.

The labor force participation rate of men has been decreasing since the 1950s, having registered 86.4 percent in 1950, 79.7 percent in 1970, 76.4 percent in 1990, and 73.3 percent in 2005. This decline has resulted from various factors. For example, the Social Security Act was amended in 1960 to make individuals under 50 years of age eligible for disability payments.

The decline in the men’s labor force participation rate is expected to continue; it is projected to be 70 percent in 2020 and 66 percent in 2050.

g) The Labor Market in US since 1950 has changed a lot.There are more women in the labor force. More contingent workers and fewer union members. Fewer people stay with the company for a long period of time. Workers are more educated. There are service jobs more instead of manufacturing jobs. More jobs require computer skills. More jobs are going overseas through outsourcing.

Technology has eliminated or redefined many jobs and how people do their jobs. Jobs shifted dramatically away from manufacturing and toward services. People are working from home. More people are working part-time and Changing careers as well.

Majority of workers in today’s workforce are in jobs calling for significant preparation. At a minimum, these jobs require an associate degree or a similar level of vocational training, plus some prior job experience and one to two years of either formal or informal on-the-job training. Examples of these occupations range from electricians to lawyers.Employment in high-skill occupations, like accountants, teachers, surgeons has increased. Due to growing aging population demand for doctors and nurses have increased.