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The Congressional Budget Office has a new study out suggesting that labor force participation is declining not so much because of our current recession, but because of long-term demographic trends:

The downward trend since 2000 can be attributed largely to the aging and retirement of the baby boomers. It also reflects a leveling off in participation among women between the ages of 25 and 54 — who are no longer participating at higher rates than their predecessors did at the same age — and a pronounced decline in participation among people under 25….Demographics account for slightly more than the entire projected decline of 3.0 percentage points in the aggregate participation rate between 2007 and 2021.

So if the CBO is to be believed, in the tight labor market of the late 90s we overshot the natural rate of labor force participation, setting us up for a sharp drop after the dotcom crash. The 2008 recession caused a another sharp drop that sent us below the trend line, but even so we’re likely to see labor force participation drop even further from now forward, regardless of how quickly we recover.

I want to write more about this in the future, but that will have to wait until I get my thoughts in order. In the meantime, there are two takeaways from this. First, we’re well below the trend line right now, and we ought to be doing everything we can to get back to it. Unemployment is our biggest problem at the moment, not the specter of future inflation. Second, the long-term trend of lower labor force participation isn’t necessarily a sign of anything fundamentally wrong with the economy. It might just be the result of an aging population and changes in work preference. More later.

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WE'LL BE BLUNT

It is astonishingly hard keeping a newsroom afloat these days, and we need to raise $253,000 in online donations quickly, by October 7.

The short of it: Last year, we had to cut $1 million from our budget so we could have any chance of breaking even by the time our fiscal year ended in June. And despite a huge rally from so many of you leading up to the deadline, we still came up a bit short on the whole. We can’t let that happen again. We have no wiggle room to begin with, and now we have a hole to dig out of.

Readers also told us to just give it to you straight when we need to ask for your support, and seeing how matter-of-factly explaining our inner workings, our challenges and finances, can bring more of you in has been a real silver lining. So our online membership lead, Brian, lays it all out for you in his personal, insider account (that literally puts his skin in the game!) of how urgent things are right now.

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