Why are workers dropping out of the labor force?
What’s causing the discrepancies between the Establishment Survey and the Household Survey? I can theorize two reasons. Read on….
Here is yesterday’s press release from the Bureau of Labor Statistics (BLS) trumpeting the wonderful headline numbers from the Establishment Survey.
Total nonfarm payroll employment rose by 528,000 in July, and the unemployment rate edged down to 3.5 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and health care. Both total nonfarm employment and the unemployment rate have returned to their February 2020 pre-pandemic levels.
This news release presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry. For more information about the concepts and statistical methodology used in these two surveys, see the Technical Note.
Employment Situation Summary, BLS, August 5th
I am peeling back the numbers, which reveal something rather disturbing. Why are people leaving the workforce? Why are the household numbers so much lower since the beginning of the year? Could it be illness? Could it be the destruction of the small business concept?
More than 70 percent of labor force nonparticipants report that caregiving, disability, or early retirement kept them out of the labor force; 13 percent were not in those categories but had recent earnings, indicating that they had been employed at some point during the previous year. Not surprisingly, caregiving is the primary reported reason for nonparticipation—characterizing about 4 in 10 individuals overall and more than half of female nonparticipants.
So, disability and caregiving can be reasons why a worker leaves the workforce? What happened to the national dynamic since the beginning of the year? It wasn’t COVID, as that has been accounted for going back to early 2020. Employer vaccine non-compliance cannot be a primary factor in this instance as the mandates were removed beginning late last year and are now a non-issue for the most part. Something else has entered the equation subsequently. Could it be the results of the high pressure tactics of the establishment to vaccinate the entire population regardless of the well-known side effects? Could it be that the side effects are finally taking their toll on the working masses?
Small business owners are getting doused and people are getting sicker
The Establishment Survey includes employee data in the Non-Farm Payrolls release. The BLS defines non-farms payrolls as the following; “all Employees: Total Nonfarm, commonly known as Total Nonfarm Payroll, is a measure of the number of U.S. workers in the economy that excludes proprietors, private household employees, unpaid volunteers, farm employees, and the unincorporated self-employed. This measure accounts for approximately 80 percent of the workers who contribute to Gross Domestic Product (GDP).”
Thus, the Civilian Labor Force includes proprietors, private household employees, unpaid volunteers, farm employees, and the unincorporated self-employed, as well as the non-farm payroll data.
So, why are non-farm payrolls climbing while the civilian labor force level struggles? I offer two reasons here;
- First, I have to conclude that our anecdotal observations regarding the fate of small businesses in the post-covid world are fleshing out in the hard data.
- Second, it seems the people are getting sicker, for whatever reason, and that’s why so many workers are now leaving the labor force. Moreover, the disabilities have little to do with Covid per se, but something that has entered the scene since the beginning of the year. Employer vaccine non-compliance cannot be a primary factor in this instance as the mandates were removed beginning late last year and are now a non-issue for the most part.
If you read my blog, you already know why small businesses are crashing and burning while the workers are dropping like flies out of the labor force.
It’s all part of the plan.