Today, the Congressional Budget Office (CBO) released multiple reports on the state of the U.S. economy. One of them, "The Slow Recovery of the Labor Market," examines current job market conditions and projects where employment figures are heading relative to historical trends. The full report is available online, but here are three quick take-aways summed up in graphical form (visuals courtesy of CBO):
- The economy is taking much longer to recover than it has after past recessions. Consumers are still hesitant to buy as many goods and services as they did before the downturn, which means employers aren't in any rush to hire.
- People will choose to work less. Aging will contribute to lower labor force participation, but federal tax and spending policies will also motivate many people to work less than they otherwise would. Specifically, CBO cites the current tax code, as well as the Affordable Care Act (ACA): "[B]y providing subsidies that decline with rising income (and increase with falling income) and by making some people financially better off, the ACA will create an incentive for some people to choose to work less." On that point, CBO has estimated that the ACA will reduce the number of full-time employees by over 2 million over the next few years, with the largest impact being felt among low-wage workers.
- Less of the population will be working at all over the next decade. According to CBO, to get back to pre-recession unemployment of five percent, 3 million people currently looking for work would need to find jobs. In 2006, just before the recession, the employment-to-population ratio was at 63.3 percent. By 2018, that could fall to 58.9 percent.