Perspectives Blog

Another look at disability and labor force participation

Zach Pandl, Portfolio Manager and Strategist | April 7, 2014

In searching for explanations for the steep decline in the U.S. labor force participation rate analysts have rightly stressed the importance of retiring baby boomers. Increase in disability share accounts for 20-25% of the drop in the labor force participation rate since 2007 (vs ~45% for retirements). We expect this shift to be essentially permanent, but growth in the disability share will also probably slow down. In searching for explanation…

Snow job!

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | January 13, 2014

…er showed weaknesses that cannot be easily dismissed. Participation rate continues to fall; in the last year the labor force shrunk by a half-million. Beyond unusual weather-related effects, discomforting trends continue to show stress in the labor markets. The Nonfarm Payroll report for December was certainly an outlier showing payrolls rose a mere 74k (far below consensus of 197k). The private sector added 87K, but the majority came from retai…

Slack and inflation

Zach Pandl, Portfolio Manager and Strategist | July 21, 2014

Today’s low unemployment rate indicates modest slack in labor market, which implies earlier Fed rate hikes and/or more inflation risk. The decline in labor force participation in recent years now looks mostly structural. Investors should remain cautious around U.S. interest rate risk despite a solid first half of 2014. Excerpted from Zach Pandl’s newest whitepaper Structural weakness in labor force participation means there is less slack in th…

Labor markets in the new digital age

Columbia Management, Investment Team | April 14, 2014

…obs as it trashes. There may be dislocation in the short term, but it will not permanently reduce the demand for labor. It will simply shift the demand to different kinds of work. The transition will not be smooth, but it will lead to increasing demand for new workers and probably create new industries. Advanced education and training is imperative in this new order, as these are unremitting forces that are changing labor markets worldwide. The w…

Yellen at Jackson Hole

Zach Pandl, Portfolio Manager and Strategist | August 25, 2014

…e less easy. Second, her extensive discussion of slack was more balanced around the structural factors affecting labor markets than her past remarks, in our view (see here for background). We would point to: (A) the comment that labor force dropouts related to disability and school enrollment are “clearly and importantly” affected by structural trends; (B) her view that “some portion” of the rise in involuntary part-time work could be structural;…

Steady as she goes

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | April 7, 2014

…nemployment rate holding steady at 6.7%. We may see a slower reduction in coming months as more people enter the labor force. The labor force rose 503K, but employment levels rose a smaller 476K, meaning the unemployed level rose by 27K. Most of the labor force rise was due to re-entrants too, probably many whose unemployment benefits ran out in January. It was unclear then whether these individuals would exit the workforce entirely or remain to…

U.S. rates — View update

Zach Pandl, Portfolio Manager and Strategist | April 4, 2014

…e: “In some ways, the job market is tougher now than in any recession.” And, in her discussion of the decline in labor force participation: “some ‘retirements’ are not voluntary, and some of these workers may rejoin the labor force in a stronger economy. Participation rates have been falling broadly for workers of different ages, including many in the prime of their working lives.” These comments suggest Yellen’s own read on labor market slack is…