Neat trick to fool Powell -- the unemployment rate is up, but it's because the labor force expanded (yes, the "over-tight" labor force that wasn't supposed to be able to expand -- that one).
A conversation with Nicholas Eberstadt on the post-pandemic "flight from work"
Tuesday, September 13, 2022
Pandemic unemployment benefits discourage work, and stimulus payments encouraged early retirement. But it's part of a very long-term trend.
Update to Strategic View
Since the 1960's, the fastest-growing sector of the labor market has been prime-age males unemployed or altogether not in the workforce. In the last two decades, females have been displaying the same pattern. The trend is associated with the rise of social spending programs, perverse incentives in health care benefits that encouraged opioid use, declining number of stable two-parent households, and mass incarceration. Workers above age 55 have seen increasing labor participation, but that has collapsed since the pandemic. This has been enabled by a pandemic-era explosion of stimulus-driven savings concentrated in below-median households who, on average, have seen their net worth rise almost double in a matter of two years. That's enough to fund early retirement. Across the labor force, post-pandwemic participation was held back by generous unemployment benefits; participation rose to some extent when the benefits expired.