If you find yourself queasy over proliferating stories about America in decline, you won't take any comfort in an article that appeared in the March 25 Financial Times.
The London-based newspaper reports that, "The U.S. is losing its edge as an employment powerhouse where the vast majority of people have a job or are looking for one." The article notes as evidence that the U.S. labor participation rate has fallen below the UK's for the first time since 1978.
The FT says the number of working age people working or looking for work in the U.S. began to drop in 2000 and fell rapidly after 2008 from 66 to 63 percent. That translates into a 7.4 million drop in the number of people working or looking for work over the past 5 years.
But in the UK, which has suffered similar economic difficulties to the United States during and after the Great Recession, the labor participation rate has held up. The FT reports the British rate is currently 63.6 percent, which marks the first time in 36 years the UK's participation rate has topped the U.S.
So why should that be disturbing? Because says the FT, "â ¦ the U.S. labor market has long been seen as one of the most resilient and flexible."
The article quotes Gary Burtless, a senior fellow at the left-leaning Brookings Institution, as saying that although the U.S. long stood out among wealthier nations for its high labor participation rate, that is no longer the case. "The U.S. used to have a reputation for being very hard working," Burtless told the newspaper.
But no more, apparently.
The article also notes that while retiring baby boomers could explain half to two-thirds of the number of people who have left the U.S. workforce, the trend remains puzzling because the UK has similar demographics, but is not seeing a like decline. Further "The greatest divergence between the U.S. and the U.K. seems to be among prime age workers. For example, among 25-34 year olds the UK participation is up from 84.3 percent to 85.4 percent between 2007 and 2013. Over the same period the U.S., participation declined from 83.3 percent to 81.8 percent."
The message here unfortunately is not hard to miss. We have since 2008 had leadership in the White House and Congress that embraces policies promoting dependency - evidence the much-noted Office of Management and Budget observation that Obamacare's health insurance subsidy structure will encourage the equivalent of 2 million full-time workers to not work by 2017.
Of course the near-infinite extensions of unemployment benefits in the wake of the Great Recession also feed this trend. Yes, unemployment benefits should be extended during a recession, but we've theoretically been in an economic recovery for five years now.
The result of these policies is the zombie economy we are currently experiencing. You cannot get real growth when vast segments of the working age population choose simply not to work. It requires higher taxes on the shrinking group that does work to support such dependency, leaving less disposable income for both people who work and people who don't. The result is companies don't hire or invest in new capital, households don't add on or make improvements, and the job market stagnates and underpays.
This, unfortunately, is what it is like to live in a slacker nation. Only when people tire of it and choose policymakers who will reward work and investment over dependency and sloth will our economy return to what it is truly capable of.
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