Middle-educated Americans offer clue to labor force participation decline, says Dallas Fed Economic Letter

For Immediate Release: Mar. 22, 2017

DALLAS—Americans with only a high school degree or some college education have been a key demographic in the decline in labor force participation since the Great Recession, according to the Federal Bank of Dallas’ latest Economic Letter.

The U.S. labor force participation rate has fallen since 2008, write Alan Armen, senior research analyst, and Tyler Atkinson, economic programmer/analyst, in “America’s Missing Workers Are Primarily Middle Educated.” This decline has perplexed economists and is a concern for policymakers because it hampers economic growth.

An aging population offers one explanation for the drop in participation; however, the authors point out that increases in educational attainment over the same period partially offset the effect of aging.

“There is no consensus on what exactly has driven the decline in participation beyond what demographics can explain,” the authors write. “Whatever the cause, it appears this decline is concentrated among those who have only a high school degree or some college education, while those with less than a high school education or a bachelor’s degree or higher are participating at a normal rate.”

“Policies that effectively target these middle-education groups by either increasing their participation rates or educational attainment levels could plausibly mitigate the overall labor force participation rate decline,” according to the authors.

Such policies could focus on boosting educational attainment or strengthening vocational training programs to help middle-educated workers acquire the skills needed to re-enter the workforce.

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Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org