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Contact Gregory S. McNeal


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Data Shows Clear Decline in Labor Force Participation Under President Obama

Bureau of Labor Statistics data shows an unmistakable decline in the Labor Force Participation Rate under President Obama.  The rate dropped from 65.7% in January 2009 to 63.6% in September 2012.  The chart below depicts the decline during President Obama’s time in office, and it demonstrates that the job situation became worse under his leadership.

Labor Force Participation rate under President Obama. SOURCE: data.bls.gov


Labor Force Participation Rate Bush Through Obama. SOURCE: data.bls.gov

The area depicted in red on the left is the Labor Force Participation Rate during President Bush’s term in office.  It shows a slow decline in the rate, starting at a high of 67.2% in January of 2001, down to 65.7% when he handed the economy over to President Obama in 2009, for an overall decline of 1.5% over 8 years.  But what the graph shows is more important than the start and end points, because it depicts a relatively flat Labor Force Participation Rate from late 2003 through late 2008, at least when compared to the accelerated rate of decline in the rate from the middle of 2009 until the present.  These are Bureau of Labor Statistics numbers and charts, and there is simply no way to spin them.  The Romney team should be showing these charts on a daily basis.


In the comments my colleague Alex Knapp asked for a break down on demographics.  In May, the Washington Post had a blog post with some of the data here.  Importantly, the decline has nothing to do with “retiring baby boomers.”  That trend line has been flat since President Obama took office.  In fact according to Daniel Hartley, a research economist with The Federal Reserve Bank of Cleveland:

While the young and middle-aged have been hopping out of the labor pool, older Americans have been hopping in. The participation rate of people 55 and up has been increasing since the mid-1990s (although it has pretty much flattened out since 2007). Some attribute this change to seniors’ improving health, which allows them to continue working later into life. Others maintain that the financial crisis may have adversely affected retirement accounts, causing older workers to delay retirement in order to rebuild their savings.

As the Washington Post highlighted, since President Obama took office, the biggest moves out of the labor force have come from individuals going onto disability, pursuing education, or “other” (which, according to Julie Hotchkiss of the Federal Reserve Bank of Atlanta, may take account of discouraged workers leaving the workforce).


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  • Alex Knapp Alex Knapp, Forbes Staff 2 years ago

    What are the demographic lines? Are there more or fewer retirees? More or fewer college students? That matters when making a judgement.

  • Greg McNeal Greg McNeal, Contributor 2 years ago

    Hi Alex,

    Good point. The Washington Post has a graphic from May that adjusts for demographic factors, same trendline.


  • Mark Anderson Mark Anderson 2 years ago

    Let’s see baby boomer are retiring, our professor should tell the whole truth. No spinning needed if tell a whole truth.

  • Mark Anderson Mark Anderson 2 years ago

    Let’s see baby boomers are retiring, our professor should tell the whole truth. No spinning needed if tell a whole truth.

  • Greg McNeal Greg McNeal, Contributor 2 years ago


    Your assertion regarding retirees is wrong.

    Try this link: http://www.washingtonpost.com/blogs/ezra-klein/post/will-americas-labor-force-dropouts-ever-come-back/2012/05/15/gIQA3IFJRU_blog.html

    What you’ll see in the infographic here, is that retirees have been flat.

    The increases in people leaving the labor force under Obama are attributable to disability, school, and “other.”

  • Pr. NcNeal,

    I am sorry but your blog is nothing but campaign rhetoric camouflaged with cherry picked data. Yes the LPR has declined under President Obama, as it has been declining every year since January of 2000 when the highest rate was recorded (67.3%). The LPR has not returned to that level since. Under President George W. Bush, it declined from 67.2 when he was inaugurated to 65.7%. Did Mr. Bush cause that decline? No, of course not. Neither did Mr. Obama cause the further decline. Presidents do cause demographic shifts like that.

    More perhaps to what is the significance of this shift? Why it the decline a bad thing?

    I believe that it is useful to point out that between 1948 (when records were first collected) and 1969 the LPR was never over 60%. This is a period of what most people consider the acme of US economic prosperity and the LPR averaged 58%. This means that the generally perceived prosperity of the average American in this period was supported by a work force that constituted less than 2/3rds of the population.

    The participation rate increased dramatically in the 1970s and 1980′s and peaked in the late 1990 and early in 2000. This parallels the general decline in overall economic prosperity the US Labor force. What this means is that more people were forced to enter the work force because the existing working population were unable to earn as much as they had in the past.

    This was the era when more and more women entered the work force. Some entered for personal fulfillment but many entered because they had to, because families could no longer survive on the income of one head of household. This corresponds to the decline in US manufacturing and the exporting of capital overseas.

    So a decline in workforce participation is not, eo ipso, a bad thing. It could, in principle, mean that more people are working and earning enough so that fewer people need to enter the work force. Put a different way, it could mean that workers are earning enough to support other family members who then do not need to work.

    However this is most likely not the case. As Mr. Knapp and Mr. Anderson have rightly noted, the overall size of the work force is declining as “Baby Boomers” are retiring.

    However, it is more likely that many more people have simply given up trying to find a job (people are counted in these statistics if they are either working or actively trying to find work). “Discouraged workers” are not “participating” in the labor market. The number of discouraged workers has increased, both in absolute numbers and as a percentage of the population, there is no doubt about that.

    The point however, it is completely dishonest to suggest that Mr. Obama is somehow the cause of widespread labor “discouragement”. The decline of US employment has been well documented and been occurring for decades. As the industrial base of the US has declined over the last four decades, these middle strata of workers has been slowly declining. The City of Detroit is the bellwether of this process. Once the industrial envy of the world, it supported a huge industrial working class with single family detached homes and two car garages. Further, it supported huge service sector which provided the needs of those industries and workers. Today it is a dusty ghost-town. What has happened in Detroit has happened less visibly in hundreds, indeed thousands, of other localities. Men who were machinists in factories are now driving cabs. Women who were managers in factors are clerks at K-Mart. Multiply this across millions of Americans and you have discouragement and declining participation.

    The decline of the US economy for the majority of the American working population is an important issue. Your efforts to “cherry-pick” some data and attempt to blame the current president for what is a decades long process is disingenuous to say the least.

    Your blog is not an economic analysis but nothing more than a Romney-Ryan bumper sticker with a few extra words

  • Greg McNeal Greg McNeal, Contributor 2 years ago


    You’ve written a lot but you really haven’t said anything.

    1) Does the data show a clear decline in labor force participation under President Obama? Yes, it does. You may not like the fact that I’ve pointed it out, but it’s just a fact. Those are BLS charts and BLS numbers.

    2) You claim my data is “cherry picked” and you go on to mention that the labor force participation rate has declined every year since January 2000. I provided 11 years worth of data starting in January 2001. Are you upset I didn’t provide that one extra year?

    3) You ask why a decline in the labor participation rate is a bad thing. This is basic economics, labor force participation is tied to economic growth, in so far as each worker is involved in producing economically beneficial outputs. A decline in labor participation is a bad thing when the reasons for that decline are that people are exiting the workforce because there are no jobs available (e.g. leaving for disability or education as was highlighted in the update).

    4) You state that a decline “could, in principle, mean that more people are working and earning enough so that fewer people need to enter the work force.” Sure, it could mean that, but that’s a theory without data. If you can prove that the decline in labor participation rate is due to everyone doing so well, I’d love to see that data.

    5) You seem upset that my blog “is not an economic analysis.” That’s like me being upset that your comment is not poetry. Unless you intended it to be poetry it’s a ridiculous critique. The blog post reported data that the average reader might not have found on their own. It didn’t cherry pick President Obama’s term, but rather reported data going back 8 years before his term. If the conclusion you’ve drawn from the data is that it’s harmful to President Obama, so be it. Did the rate drop under President Obama? Yes. Did the job situation get worse under his tenure? Yes. Did the most precipitous drop occur 6 months into his tenure? Yes. Did the rate of decline accelerate under his tenure? Yes. You clearly think this is damaging to President Obama, given your insistence that it’s a “Romney-Ryan bumper sticker” or “campaign rhetoric.” That says a lot more about your view of the data than it does about the post.

  • Pr. McNeal,

    You have replied quite a bit to my comment that “said nothing”. It seems to me if my comment had in fact said nothing, you could have replied with far fewer words.

    What is completely lacking in your blog is any explanation of why the LPR is declining and how Mr. Obama is responsible for that decline.

    how Mr. Obama

    1) Since you agree that the LPR has been declining since President Clinton’s administration how can you blame the last few years on Mr. Obama? This is obviously a long term demographic and structural change that began long before Mr. Obama came to office. Moreover, you have not identified any policies that Mr. Obama adopted that have or can impact the LPR.

    2) My point was that you ignored that data from 1948 until 2000. The LPR is not a highly volatile measure, the direction of the curve does not change frequently. For over 20 years (1948 – 1969) the curve was flat (around 58%). From 1970 until 2000 it rose an all time high (67.3%). Since the end of the Clinton administration, through entire Bush administration, and through all of the Obama the LPR declined. My complaint is that you chose the portion of that long history that served your political objectives.

    3) Yes, it is a bad thing when people leave the workforce because there are no jobs. Why are there so few jobs? Might it have something to with the The Great Recession which began before Mr. Obama came to office? Might it also have something to do with the massive export of capital that has been hollowing out the US economy for the last four decades? Since the causes of high rates of unemployment precede Mr. Obama election, attempting to blame him for that only reveals a political objective rather than economic deliberation.

    4) See above

    5) Yes, it is cherry-picking when you remove the historical context. You attempt to blame Mr. Obama for a process that began years before his administration and will continue long after.

  • Andy Whallon Andy Whallon 2 years ago

    Since 1990, the Labor Force Participation Rate has shown a remarkable correlation with private GDP as a percentage of total GDP. Private sector GDP is total GDP minus total Government spending. In short, the LFPR will not increase and the economy will not turn around until spending is cut, as seen here:


  • John McHugh John McHugh 2 years ago

    I’m curious because I did not see it directly stated in your piece; do you believe the decline in labor rates is directly due to president Obama and/or his policies?