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Another look at disability and labor force participation
In searching for explanations for the steep decline in the labor force participation rate analysts have rightly stressed the importance of retiring baby boomers. This trend appears to be the single most important factor depressing participation over the last six years. However, we have been surprised in recent conversations with investors about the limited agreement on another important driver: the steady increase in the share of workers leaving the labor force due to injuries or other serious disabilities. The rise in the so-called disability share—the percent of the adult population out of the labor force due to disability—has also contributed to the structural weakness in the U.S. participation rate, and this colors our interpretation of current labor market statistics. Read more…