Great news: Working population percentage drops to three-decade low

Maybe we can call this Generation U — for unemployed.  Three decades ago, the US experienced a dramatic shift in culture and economics as women entered the workforce in record numbers, and our economy expanded to meet the labor supply.  As USA Today reports, we have now returned to the same working percentage of the population as we had at the beginning of the expansion, an astonishing decline that doesn’t appear to be slowing much:

The share of the population that is working fell to its lowest level last year since women started entering the workforce in large numbers three decades ago, a USA TODAY analysis finds.

Only 45.4% of Americans had jobs in 2010, the lowest rate since 1983 and down from a peak of 49.3% in 2000. Last year, just 66.8% of men had jobs, the lowest on record.

The bad economy, an aging population and a plateau in women working are contributing to changes that pose serious challenges for financing the nation’s social programs.

There are two pressures on the structure of the social programs, both at crisis stages.  The first is the rising number of those eligible for benefits.  When programs like Social Security and Medicare first began, most Americans weren’t expected to live long enough to draw benefits for more than a couple of years.  In the fifty years since Medicare began, we have lowered the age of eligibility and massively expanded benefits.  Not only do we have more people entering the system thanks to the Baby Boom of the postwar years, but thanks to better health, they’re staying in the program for at least fifteen years at a time.

Meanwhile, population growth has slowed in the eighty years since the start of Social Security and fifty since Medicare.  Instead of having worker-to-enrollee ratios of 16-1, we’re rapidly approaching 2-1, which turns the entitlement structure into a teetering Ponzi scheme.  The only corrective to that would be to have constant job creation and increasing percentages of workers in the population.  Instead, we’re declining there as well, and that means that we should be seeing record numbers of Americans on the federal dole.

And we are:

One in six Americans is receiving help from the government, just as fiscal austerity threatens to reduce some of that aid.

Soaring unemployment during The Great Recession has driven tens of millions of people to the dole. Enrollment in Medicaid and food stamp programs are at record highs, while unemployment insurance rolls remain at elevated levels. Many people depend on more than one program. …

The number of people in the Supplemental Nutrition Assistance Program, known as food stamps, hit a record 44.2 million in January. That’s up 4.7 million from the prior year. …

More than 8.4 million people are collecting either state or federal jobless benefits. While enrollment is down from its peak of 12 million early last year, it is still more than double the number it was when the recession began in late 2007.

These programs sap even more resources that might go to extending the life of the retirement entitlement programs that are creaking toward collapse.

Jim Geraghty points out the irony of Barack Obama giving a lecture about “social compacts” being the greatness of America:

Who’s really changing the America we’ve known in our lifetimes? Since 1950, we’ve had unemployment above 8 percent exactly twice, in the mid-70s and early 1980s. Both were milder than the current recession, and both ended with economic booms. Instead, under this president, we’ve spent trillions and we still limp along, told to celebrate every time unemployment drops a tenth of a percentage point, as more Americans endure foreclosure rates, a “scorched” housing market and more require government assistance. As noted earlier, we’re in an era ofmuch higher state and local taxes. The era of $4 to $5 per gallon gas will eat up a lot of those ever-scarcer discretionary dollars this summer; yet another year of Americans cutting back on their summer vacations.

“Changing the basic social compact”, Mr. President? Look around you when you’re on your way to your next top-dollar fundraiser with NBA stars, lobster Hors d’oeurvres, seared maine diver sea scallops and rosemary braised short ribs. American life is already changing; you and your policies have ushered in the New Era of Diminished Expectations.

In order to reverse this trend, we need to put more people back to work and completely restructure entitlements, and not necessarily in that order.

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