Liesman: Workforce Changes Result in More Grandmothers Working During 'Man-cession'

Amid a painfully slow job recovery, one of the great mysteries of this recession has been the disappearance of several million workers from the labor force.

The decline in the participation rate — the percentage of the population who say they are part of the workforce — has eclipsed every other recession of the past 50 years. The numbers are staggering. Since the labor force peaked in October, 2008 at 155 million, 2.4 million Americans have dropped out of the labor force. In the prior recession earlier this decade, the labor force dropped by just 600,000. Before the recession, 66 percent of the population said to count them in the labor force. Now, it’s fallen to 64.2 percent.

Until now, there’s been little data available on just who is leaving and who is entering the workforce. But CNBC received detailed data from the Bureau of Labor Statistics and crunched the numbers on the change from October, 2008, when the workforce peaked at 155 million Americans, to the most recent report in February.

The two major findings:

• The trend of the aging of the workforce, in place before the recession, has dramatically accelerated, especially among older women.
• Younger people have fallen out of the labor force in numbers never before seen, especially younger women.

The same changes in the demographics of who’s in and who’s out of the workforce are obvious in the changes of those who have gotten jobs. The inescapable conclusion is that grandmothers are getting jobs and their granddaughters are not.

Of the 2.4 million Americans who have dropped out of the labor force, about 60 percent are men and 40 percent are women. Men have left in greater proportion than their share of the labor force. That is, men represent only about 54 percent of the workforce, but made up 60 percent of the departures. This also showed up in a higher male unemployment rate, which peaked at 11.4 percent, three points higher than for women, and it’s why some economists have called it a "man-cession."

But digging deeper into the data finds a story that in some cases is much more troubling and surprising. In fact, 4.3 million Americans between the ages of 16 and 54 no longer consider themselves part of the work force. They have tuned out. At the same time, nearly 2 million Americans 55-years or older have tuned in and joined the workforce.

Inside this latter group, more than half a million women between the ages of 62 and 64 have joined the workforce. Over the time period we looked at (from October, 2008 to February, 2011) this was the fastest growing demographic.

The fastest contracting demographic is almost exactly on the opposite end of the spectrum: women between the ages of 16 and 17. More than 600,000 teenage women have left the workforce in that time frame, a decline of more than 37 percent.

Granted, this narrow demographic data can be volatile. As you slice the data thinner and thinner, error rates rise. But the trend is unmistakable from the labor force data and is backed up by employment data: the number of women between the ages of 62 and 64 who are employed (as opposed to just saying they are available to work) has grown by a third. Meanwhile, the number of women aged 16 to 17 who are working has declined by 43 percent (36 percent for men of that age group).

The reasons for this trend are less clear than the trend itself. It stands to reason that older Americans would come back into the labor force because of a need to repair their broken retirement accounts. Depending on the wages they demand to come back to work, this could be a boon to employers. While health care costs are higher, the older worker brings experience and, in many jobs, probably a higher level of productivity. It’s probably fair to assume that the amount of training required for an older worker is less than for a younger worker.

Why teenagers, and especially teenage girls are dropping out is more of a puzzle. It is possible that older workers are displacing them. It is also possible that in a scarce job environment, particularly the 18- and 19-year-olds, find concentrating on education a better use of their time.

What is clear is that we need to better understand this data if we are going to figure out as a nation, why people are dropping out of the workforce, and how best to rein them back in and get them back to work.