As part of a larger study on the future of the post-World War II liberal international order, RAND researchers analyze the health of the existing order and offer implications for future U.S. policy. [Note: contains copyrighted material].
U.S. labor force participation rate, or the fraction of adults who are either employed or are searching for work, has fallen steadily since 1999. This is a trend that many economists find troubling, as the labor force participation rate is an indicator of household living standards and economic vitality. In 2016, over one-third (37.2 percent) of adults in the United States—including nearly one-fifth (18.7 percent) of prime working age adults (between 25 and 54 years old)—were not in the workforce. The large number of adults who are not in the labor force is a puzzle that cannot be fully accounted for by factors like baby boomers aging out of the workforce, women engaged in caregiving, or recent college graduates delaying the responsibilities of adulthood. [Note: contains copyrighted material].
Since the global financial crisis, many countries have set up new authorities to address emerging financial stability risks. In a new paper, Federal Reserve Board Associate Director Rochelle Edge and Miriam K. Carliner Senior Fellow Nellie Liang study these authorities to determine their ability to set macroprudential policies to reduce potential systemic risks that could arise, for example, from rapidly rising house prices or persistently low interest rates.
Using a new dataset for 58 countries, Liang and Edge find that although formal multi-agency financial stability committees (FSCs) have been created in 41 countries, just two have direct powers to set policies and only 11 can issue “comply or explain” directives, in which an agency is expected to respond by taking the directed action or explain why it did not. Regression results suggest the arrangements are designed more to share information than to take actions. As a result, most new financial stability authorities are not well positioned to direct countercyclical macroprudential policies, and provide meaningful alternatives to monetary policy to reduce time-varying financial stability risks. [Note: contains copyrighted material].
A balanced, broad-based economic recovery seems under way in all major regions of the world. Managing the recovery poses challenges in the short run but they appear relatively benign. Looking forward, however, the authors see a set of new risks: (1) Partly because of the crisis and partly because of subsequent low growth, public debt has reached postwar historical highs in many advanced countries; (2) productivity growth, and with it potential growth, has declined. Whether it remains low or picks up in the future is uncertain; (3) interest rates are expected to increase from their current low levels. By how much and at what pace is—again—uncertain; and (4) many advanced countries have strong populist movements (or even populist leaders) espousing risky macroeconomic policies. The authors warn that rising interest rates, combined with low growth, high debt, and populist pressure, would be a recipe for fiscal crises. [Note: contains copyrighted material].
Working longer can significantly benefit older adults, improving their financial security and possibly their physical and emotional health. Older adults have been working more over the past two decades, but employment gains after age 65 have been concentrated among college graduates. Early retirement will likely create growing financial challenges for less-educated older adults, who risk falling further behind their better-educated peers. This chartbook shows how trends in various outcomes, including labor force participation, full-time employment, self-employment, and earnings, differ by education, age, and sex for older adults. [Note: contains copyrighted material].
The Great Recession caused labor market devastation on a scale not seen for many decades. Millions of jobs were lost in the United States during 2008 and 2009, leaving the labor market with a hard road to recovery. Indeed, that recovery has required many years of job growth, and it was only in April 2014 that total employment reached its pre-recession level.
However, this milestone did not mark a return to pre-recession labor market conditions. Because the U.S. population is growing, simply reaching the previous number of jobs is not sufficient to return to pre-recession employment rates. At the same time, more baby boomers have entered retirement, somewhat offsetting the effects of population growth and reducing the number of jobs needed for a full economic recovery. [Note: contains copyrighted material].
For many Americans, the workplace is hectic, hazardous, and physically demanding — yet many retirees would still consider rejoining the workforce if the right opportunity came along.
Those are just a few of the results from the American Working Conditions Survey — one of the most in-depth surveys ever undertaken about the American workplace. This brief presents highlights from the survey, conducted by investigators from Harvard University, the RAND Corporation, and the University of California, Los Angeles.
(Half of American workers say that they work in their free time to meet workplace demands, 63 percent feel that they are doing useful work, and 46 percent of retirees age 50 and older say that they would return to work if conditions were right.) [Note: contains copyrighted material].