In the latest jobs report, out Friday, there’s some details to like and and some to be worried about.
On the “maybe we should worry about this” side, the labor force participation rate — aka the percentage of Americans either working or actively looking for work — dropped to 62.4%, which is well off the recent highs of the past couple years.
So just how concerned should we be?
Sometimes there are positive reasons people leave the labor force: Older workers finally reaching a planned retirement, younger workers going back to school for an advanced degree, your crypto-loving cousin cashing out his Bitcoin to try van life for a few months.
But economist Cory Stahle at Indeed said lately, the reasons aren’t so positive.
“There are some evidence that maybe people are saying, ‘It’s taking me so long to find a job, what am I doing?’ Right? Like, ‘I’m just, I’m gonna stop,’“ he said.
About six million people last month wanted a job but weren’t in the labor force. That’s 300,000 more frustrated people than in April.
Stahle said in certain industries like tech, dwindling job openings may be keeping potential workers on the sidelines.
“So what we see in the Indeed job postings data is that as of the end of May, that software development job postings were about 40% below where they were in February 2020,” he said.
Much of the drop in May labor force participation was driven by workers age 24 or younger.
Economist Preston Mui at Employ America said that’s troubling, but not panic-inducing.
“I would say it’s a warning sign for the labor market,” he said. “If we saw a very large decline in the labor force participation rate for people aged 25 to 54, that would be a really, really bad sign for the labor market.”
The prime age labor force participation rate did drop slightly in May, but overall is still, historically, pretty high.