Agree completely and I've never said otherwise. I have said that it's pretty amazing how well the economy is doing despite everything from a fiscal and regulatory perspective that is being done to wreck it. Suffice it to say that GDP is "sub-optimal." I think we are on the same page here.
You are correct, but there is a caveat. It's call the Labor Participation Rate.
The main question is why is the labor force participation rate declining to levels we haven't seen since the 1970's? A part is the relatively week economic recovery (frictional). Another is the aging population of Baby Boomers that started retiring (structural). I'd like to see some serious analysis of these two issues. I'm not an economist (although I play one for my company ;-) and don't have the statistical chops to do this heavy analytical work.
I enjoy our banter as well. Always good to engage in these discussion where I am challenged and learn something.
A significant factor may be the growth in the number of potential laborers on disability. The number I heard recently was 14 million, but I took it that the 14 million referred to only recipients of Gov't disability payments. Maybe someone can confirm, correct, or add more details to this.
However, while I realize this is "anecdotal evidence", I know a few people who are on what is essentially private disability of one sort or another. These are typically settlements after a worker has been "disabled" to one degree or another by an injury on the job, etc., and the employer (or an insurance company) is paying out over a period of time. There are quite a few of these people out there, I believe -- in our litigious society their numbers seem to be growing also, but I've seen no definitive statistics regarding this group. In any case, many persons in the above groups either do not work, or if they do it is off the books. Indeed, I suspect a part of the resilience of the US economy may actually be due to the underground economy, but that is another discussion.
I do have a question about manufacturing output. WHAT is being manufactured here, that holds up the manufacturing output numbers? Cars at prices few can afford? Certainly, few consumer goods that one sees in stores at almost any price level are being manufactured in the US. High tech, da, but how big a chunk can that be? Also... It would seem to me that any manufactured product being subsidized by the gov't should have the % that is subsidized taken back off of "manufacturing output", as that % is an illusion.
One big problem is that the nature of work has changed, with far more automation and a need for more complex education to do the job. More jobs requiring computer literacy which the older workers are not as well trained for. Fewer jobs requiring physical labor and more people physically unable to actually do them. I think that explains a lot of the decline in Labor Participation Rate. It also is one reason that the illegal immigrant population has dropped from 12 million to 11 million.
I heard an interesting interview on public radio with a women who was studying use of Supplemental SS for the handicapped. She found about 1/3 of the population in her study area was using SSS. This may have included being above a certain age as I missed the beginning of the program. Most of the people had a bad back, diabetes, or obesity which prevented them from being able to stand at a checkout counter, work in a McDonalds, etc., or they lacked the education to do a sit down office job.
Based upon what I’m seeing from my acquaintances, the labor participation rate is dropping dramatically because of things like long-term unemployment making people simply unable to get back into the job market on one hand, long-term unemployment insurance making people unwilling to get back into the job market when they’ve made the adjustments to be able to live on unemployment, things like another almost 8,000,000 people signed up for disability in the last five years compared to about 3 million before that, and even more people moving in together.