Much ado has been made about the shortfall in the headline employment-to-population ratio and the headline labor force participation rate of late. Many have claimed that recent wage and price pressures trace back to a “labor supply shock”. Some have even tried to make the more nuanced claim that this disappointment holds even after controlling for demographic effects, with specific attention given to workers aged 55 and older. The employment rate of this group in October was 37.9%, compared to its pre pandemic high of 40.5% in July 2019.

This morning, the Bureau of Labor Statistics released the new Employment Situation Report. As was true in previous months, the data show a strong recovery since the pandemic recession, although there are signs of weakening in the household survey. The prime-age (25-54) employment-to-population ratio fell from 80.2% to 79.8%, slightly lower than its pre-pandemic high of 80.5%. The all-age employment-to-population, however, has not seen the same recovery since the pandemic started. The labor force participation data shows the same pattern.