Mar 15, 2022 - 0 Comments - Economy -

Chart: The Stunning Pandemic Driven Plunge in the Labor Participation Rate

US Labor Force Participation Rate 10 Years Ending January 2, 2022

With news of Starbucks unionizing and personal experiences we have all had with unavailability of workers, this chart should come as no surprise. Nonetheless, it is a stunning thing to see it visually in a chart like the one above. The peak just before the plunge was 63.5%. Two months later, it bottomed out at 60.2%. That is a difference of 3.3%, and a difference of 5.2% of the pre-decline number (3.3% decline / 63.5% before the decline). Labor has thus been in control, at least for the moment.

This is contributing to increasing inflation expectations as can be seen in the TIPS spread. Though still down, the labor force participation rate is rising from its mid-pandemic lowers, however. Thus this plainly evident stress point of worker shortages may improve in coming months.