The Mystery of Workforce Participation

I’m willing to bet that workforce participation in hunter-gatherer societies is darn near 100% for the key demographic of men aged 24 – 54. Ya know? So, if all we want is high workforce participation, all we’d have to do is return to a hunter-gatherer economy.

Men aged 25-54, fully employed

Despite the great progress toward a return to just such an impoverished, backward economy made here in recent years(1), I’m thinking there’s more to it, for example, how many of us are willing to tolerate living in a less than total employment economy for benefits such as cell phones, indoor plumbing and hospitals.

Yet, invariably, any report of a decrease in the percentage of the adult working age population in the workforce is greeted as bad news. This one, for example. And, I hasten to add, it may be. But it might not be.

Question: are the countries more desireable to live in as one moves left to right on this chart? If not, why would one care about workforce participation? Should I prefer to live in Mexico or the Slovak Republic because a higher percentage of males work? Or does pay and opportunity figure into it? 

The implied judgement: Higher and increasing workforce participation = good; lower and falling workforce participation = bad. Is this true? Or only sort of true within a certain range and for certain people?

Wouldn’t it be nice if the percentage of working aged people who no longer worked because they didn’t have to were routinely reported?  Sure, one imagines that many of the people not in the workforce would like to have a good paying job. One also imagines that most of the working age people in or out of the workforce would love to be in a position that they didn’t have to work unless they wanted to. That’s me, for sure – I’d retire in a heartbeat if I could, if, somehow, a few million bucks fell in my lap. Why not? I have plenty to keep me busy and entertained and useful every waking hour. Imagine all the essential blogging I’d do! Or not.

Starting 0ver 20 years ago, it became quite possible, even common, for some mid-level guy or gal in the tech field to get some stock options or make a few astute stock purchases and then, a few years later, find themselves sitting on millions in assets. A lot of those folks looked in the mirror one morning, and thought: I don’t actually have to go to work anymore. And some of those soon didn’t. And more still do every day.

Rather than being some sort of problem, this is in fact the outcome of a free market most to be desired from an individual’s perspective. If I had a few million in the bank-equivelent, think of all the good I could do! Think of all the time I’d have!

Now think of a nation with a growing number of such people, people who are attached in some sense to their money because they did, in some sense, earn it. What a wonderful place that would be! (That’s also the nightmare of statists everywhere, but that’s another story.)  If you were married or the adult child of such an one, you, too, might be able to not work if you didn’t want to – how cool is that? Soon, we’d have a growing pool of people with resources and time. Sure, I suppose, some waste it. But many would not – I fervently believe I would not. The possibilities of local action to make life better are endless!

So, while I’d readily believe that such people make up a small percentage of the decrease in workforce participation, should we not at least break them out of the total? Should we not celebrate them at least as much as we lament those who’d like a job but can’t get one?

On a more serious level, this equating work with prosperity and, ultimately, with personal goodness itself (the hoary Protestant Work Ethic) is merely an example of how economic reporting, reflecting economic teaching, makes things much simpler and black-and-white than they really are (2). Is growing manufacturing output a good or bad thing? How about a falling average workweek? Growing GDP? Falling consumer debt? Are these things, in and of themselves, good or bad? How can you tell? There are situations were they might be good or bad or indifferent. They might be good for some people, bad for others, and indifferent to others or on the whole. And there are plenty of  other cases like this as well. At the very least, the standard disclaimer should say something like: Within a certain range, all other things being equal. Note: all other things are never equal.

Right?

  1. Just think of the low carbon footprint! I quiver!
  2. And that’s even before you reach the Marxist/Bernie level of willful stupid. Nope, here I’m talking about economics as understood by people at least trying to make sense.
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Author: Joseph Moore

Enough with the smarty-pants Dante quote. Just some opinionated blogger dude.

2 thoughts on “The Mystery of Workforce Participation”

  1. makes things much simpler and black-and-white than they really are

    Well… that’s just data gathering in general (on my mind at the moment because I’m working on a lot of data analyzing at my day job right now). It’s a bit like the coastline paradox. You either get more and more detailed, more and more refined – until eventually you have nothing useable and nothing can ever be compared to anything else because not even two apples are alike.

    Or we have the opposite problem of setting it too wide and suddenly everything is like everything and you can get any result you want. Such is life.

    1. I get your point, but I’m not sure it’s what I’m objecting to: it’s more like if you were to say that rocky coastlines are better than sandy ones. You’d need to specify that rocky coastlines are better if what you’re worried about is reducing erosion – they’re not better if what you want to do is work on your tan. Thus, not participating in the workforce is bad if the non-participant would otherwise want to participate; but not participating is good if the non-participant is not participating because he doesn’t need the money and has better things to do.

      Modern economics began as the child of Moral Philosophy (Adam Smith’s specialty) , which studies good and bad actions of people. Now days, it’s more common to pretend that economics is a science divorced from moral considerations. But it can’t be: outcomes must be judged by whether that are good or bad, not just efficient or productive.

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