Older workers drop out of labor force

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John Sennott's last day at work at BNY Mellon was June 30. It may be the last day he ever works.

Mr. Sennott is now one of the missing workers of America.

Mr. Sennott, 67, of Regent Square handled computer accounts for BNY Mellon for the last 15 years.

He lost his job in a way too familiar with too many workers. BNY Mellon sold his division to a competitor in New Jersey. After the sale, he and his co-workers spent days doing what they had been hired to do, taking care of the programs that handled stock trades. Then at night and on weekends he worked overtime, being paid to put himself out of a job.

The bank gave him two weeks pay for each of the 15 years that he worked there, then closed his division.

Without that push out the door, he said he would have worked at least through the spring of 2014 when his daughter, a senior at American University, expects to graduate.

Mr. Sennott's wife, Lesa Rosamond, 57, said they never expected Mr. Sennott to stop working in his 60s.

"He doesn't have much of any pension," she said, because he had only been working for the bank for 15 years. They also had children later in life, so their youngest is still in college.

There are 550,000 men older than 55 who were expected to be in the labor force but, in the wake of the Great Recession, have stepped out.

PG graphic: Labor force participation rate, Nov. 2013
(Click image for larger version)

In the years since the collapse of the economy, the measure of how many people older than 16 are either working or trying to find a job, known as the labor force participation rate, has fallen from 66 percent at the end of 2007, when the recession began, to 63 percent last month.

In November 2007, the Bureau of Labor Statistics published its projections for how the labor market would look in 2016, just a little more than two years from now. Those projections called for declining participation by young workers, ages 16 to 24, for a number of reasons: Young people are spending a greater amount of time in school, and previous recessions showed they were most vulnerable to economic downturns.

"They usually are the first group to be fired and the last to be rehired," according to the paper, written by Mitra Toossi, an economist at the bureau. The projection was published one month before the official start of the Great Recession.

By those projections, the labor department expected that 38.6 percent of teenage boys would be working or at least looking for work last month; instead 33.4 percent are. For teenage girls, 39.7 percent were expected to be in the labor force, but 34.7 percent are.

Only women in their early 20s are in the labor force at a slightly higher rate (68 percent) than the bureau projected (67.8 percent). More men than women in their early 20s are in the labor force (72.4 percent) but fewer than were projected (77.2 percent).

Workers older than 55 were expected to have a greater presence in the labor force as the number of people in that age group increases. The participation rate of older workers did grow but not by as much as expected.

Heidi Shierholz, an economist with the Economic Policy Institute in Washington, D.C., called those 2007 projections "the best guess" of what was supposed to happen in the economy -- and the best way to judge the damage inflicted by the Great Recession. From those projections, Ms. Shierholz has extrapolated how many "missing workers" there are in the U.S.

Measuring how big the labor force should be is not as simple as measuring the size of the working, noninstitutionalized population. There are always going to be people who are not in the labor force: People enroll in school, take time out to raise children, care for ailing family members, join the military or are incarcerated, for instance.

But now there is another level of the population that is not in the labor force -- those who have just given up on working for a host of reasons.

Mr. Sennott, for instance, retired earlier than he wanted to, in part, he said, because the process of working long hours to throw himself out of work burned him out.

Other people are burned out from trying to find work and continuously receiving rejections, or worse -- and more common -- not receiving acknowledgement that an application was even received.

Ms. Shierholz estimated that there are 5.66 million "missing workers" and if those workers were added to the Labor Department's count of unemployed workers, the unemployment rate would be 10.3 percent.

"What we know is there is a massive participation gap," she said. "You can see that incomes are down and poverty has risen.

"We don't have much of a social safety net."

The most recent unemployment report, which showed unemployment falling to 7 percent while 203,000 jobs were created, would be considered weak at any other point since 1948 when the Bureau started keeping its statistics.

"We keep thinking we will see some improvement in the labor market and that we must have hit bottom," Ms. Shierholz said, "but we just haven't hit that yet."

Ann Belser: abelser@post-gazette.com or 412-263-1699.

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