Update > Long-Term Projections of Labor Force Participation

The Congressional Budget office is preparing the economic forecast underlying its forthcoming report on the budget and economic outlook. In this blog post, they explain those updates and compare them with the agency’s previous projections and with those of the Social Security Trustees.

The full economic forecast will be described in The Budget and Economic Outlook: 2017 to 2027, which will be released on January 24.

The flattening of the overall participation rate over the next 30 years, with a constant age-and-sex composition assumed, reflects the offsetting effects of several trends, some that push the participation rate down and others that push it up. CBO projects continued downward pressure on the participation rate from three trends.
1. First, the members of subsequent generations, who are replacing baby boomers in the labor force, tend to participate in the labor force at lower rates.
2. Second, the share of people receiving disability insurance benefits is generally projected to continue increasing, and people who receive such benefits are less likely to participate in the labor force.
3. Third, the marriage rate is projected to continue declining, especially among men, and unmarried men tend to participate in the labor force at lower rates than married men.

CBO expects that those forces will be mostly offset by three trends working in the opposite direction.
1. First, the population is becoming more educated, and workers with more education tend to participate in the labor force at higher rates than do people with less education.
2. Second, the racial and ethnic composition of the population is changing in ways that increase participation in the labor force. Like the Census Bureau, CBO expects Hispanics to make up an increasing share of the population, which would increase the overall labor force participation rate, and expects non-Hispanic whites to make up a diminishing share, which would decrease the participation rate—resulting, on net, in an increase.
3. Third, increasing longevity is expected to lead people to work longer.

How Have the Projections Changed Since Last Year?
How Do CBO’s Projections Compare With Those of the Social Security Trustees?
Read entire report >> https://www.cbo.gov/publication/52365