U.S. labor force growth is set to slow further over the next decade as more Americans retire, which will confine the economy to a moderate growth path, according to government report on Tuesday.
In its biennial employment projections for 2014-2024, the Labor Department forecast the work-age population increasing at an annual rate of 0.5 percent, reaching 163.8 million in 2024.
That compares to a 0.6 percent pace of increase between 2004-2014 and is a further slowdown from a 1.2 percent rate in the 10 years through 2004.
Labor force participation was forecast to decline to 60.9 percent in 2024 from 62.9 percent in 2014. This slowdown “is expected, in turn, to lead to gross domestic product growth of 2.2 percent annually over the decade,” the department said. It said this should generate 9.8 million new jobs, “a 6.5-percent increase between 2014 and 2024.”
The labor force participation rate, or share of working-age Americans who are employed or looking for work, is currently near a near 38-year low of 62.5 percent. Shrinkage in labor force participation has accounted for the bulk of the drop the unemployment rate from a peak of 10 percent in October 2009 to the current 7-1/2-year low of 5.0 percent.
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