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February 27, 2012

Non-Participants: The Massive Problem for Our Labor Force and Our Economy



In the debate between a strengthening vs. weakening job market, both sides have presented statistics that support their claims. The economic pros state that the economy created 243,000 jobs in January, which was much better than expected. However, on the other side of the coin, the number of people who left the labor force in January rose by 1.2 million to 87.8 million. In this article, we are going to examine the two and discuss the issues we have with such a large growth in non-participants.

First, we charted the number of workforce employed to non-labor force participants going back to 1975. We did this as opposed to labor force size, because unemployed persons in the labor force should be considered the same as non-participants for our economic analysis.



Since we are dealing with a broad time frame, along with large numbers, we wanted to refine the research further.

In order for an individual to be a non-participant in our economy, they need to depend on people who are working. Whether it's a retired senior citizen receiving Social Security checks funded by current employee taxes, or a 30 something who, while unemployed, foreclosed on his house, and moved back in with his parents.

Therefore, we feel the best indicator of this is taking the ratio of employed to the non-participants of the workforce.



Currently, for every non-participant, there are 1.611 people employed. This is the LOWEST level in our economy since May of 1983. Whether it's a college student who isn't working, a homeless person living at a shelter, or a family living in their parents basement, we have a record number of adult dependents in our economy and little job creation to show for it. This has a negative impact on social entitlement costs, tax collection, and our overall economic freedom.