What caused the decline in the labor force participation rate in April? It's not so much that lots more people stopped looking for work or left their jobs; it's that fewer people started looking or started working, according to one Labor Department official.
"Our analysis of the household survey data suggests that the April labor force decline was due mostly to fewer people entering the labor force than usual, rather than to more people exiting the labor force," wrote Erica Groshen, commissioner of the Bureau of Labor Statistics, in a statement on the numbers.
The shrinking labor force participation rate was one blemish on an otherwise positive jobs report. The labor force participation rate — the share of the US population that's either working or actively looking for work — fell by 0.4 percentage points, from 63.2 to 62.8 percent, matching a 35-year low.
More months of data will shed more light on this, of course, but for now this might signal that a couple of common predictions about recent policy effects on the labor force haven't yet come to pass. Though people have been increasingly signing up for Obamacare, Groshen's statement signals that last month's labor force declines didn't come because people left their jobs, given the opportunity to get health insurance outside of employment.
It also signals that the end of extended unemployment benefits aren't pulling people out of the labor force. To get unemployment benefits, a worker has to be actively looking for a job. Some thought the end of extended benefits, therefore, would make people stop looking for jobs, but if Groshen is right, then at least last month, expiring and expired benefits didn't have this effect.
So that's two factors ... out of a whole mess of possibilities. If people aren't entering the labor force, that could include a whole variety of phenomena, like young people going to college instead of straight to work after high school (or young people just moving in with their parents instead of working). Whatever it is, untangling it could take quite a while (and a lot more data).
