The labor force participation rate has declined steadily for 20-plus years. There is no great mystery as to why. Government social benefits (i.e. welfare payments), to Americans have grown dramatically.
- The green line in the chart below is the Labor Force Participation Rate. The red line plots Government social benefits.
- The two big red spikes mark the COVID “stimulus” handouts which did nothing more than create instant inflation.
- Labor participation has improved modestly as COVID-related benefits have dissipated. However, social benefit payments remain north of Q1 2020 levels by approximately $800 billion.
- Eliminating government social benefits will dramatically reduce inflation and moral hazard while simultaneously increasing labor force participation and productivity.
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