newspaper rollA new report by the White House’s Council of Economic Advisors states that the declining number of people in the U.S. who are part of the labor force is a drag on the economy and the government should enact policies that will boost the number of workers, including reworking immigration laws.

“In the long run, the growth rate of the labor force underpins the growth rate of employment, which, along with productivity growth, is a key determinant of the growth rate” of the economy, according to the White House Council of Economic Advisers, led by Jason Furman.

The report issued, titled “The Labor Force Participation Rate Since 2007: Causes and Policy Implications,” suggests government action is needed because of the large number of people who have dropped out of the workforce.

The labor force participation rate, that percentage of people employed or looking for a job, has fallen and has stagnated around a nearly four-decade low. The reasons include the retirement of baby boomers and the large number of workers whose skills are outdated or who dropped out of the workforce due to the recent economic recession. Economists use this rate as a gauge to measure the health of the economy.

According to the report, an overhaul of immigration laws would increase the labor force participation rate to negate the effects of a large pool of aging retirees. This would help spur further economic growth. This would provide other benefits like increasing the GDP and lowering budget deficits.


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