The last decade was free of recessions and from the opening bell in January 2010 to the closing bell in December 2019, the Dow Jones Industrial Average and S&P 500 soared 173.60% and 189.35%, respectively. The Gross Domestic Product increased from $14.992 trillion to $21.433 trillion. Yet during that same period, the labor force participation rate actually declined.
So, how could it drop when the economy was booming and labor force participation ages 65 and over. The oldest baby boomers were 64 in 2010 and 73 in 2019. As they aged, a large segment of the population shifted into 65 and older age groups.
Because older Americans are less Likely than younger ones to be in the labor force, this demographic shift reduced the overall labor force participation rate.
According to this, which of the following statements best explain the labor participation change?
Hint: Use the labor Force Participation Formula
A. The labor force participation rate grew in every age category because baby boomers are aging which led to an overall increase in the labor force participation rate in the last decade.
B. Since baby boomers are more likely to be in the labor force, then using the labor force participation formula, the numerator increases and the denominator stays constant; thus, the labor force participation rate declines.
C. Since baby boomers are aging and are less likely to participate in the labor force, then using the labor force participation formula, the denominator decreases and the numerator rises; thus, the labor force participation rate decreases.
D. Since baby boomers are aging and are less likely to participate in the labor force, then using the labor force participation formula, the denominator increases more than the numerator; thus, the labor force participation rate decreases.
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