Somebody is Wrong on the Internet! (Yglesias edition)

Matt Yglesias argues that we need not worry about plummeting workforce participation because we still have a rate as high as Germany and higher than Sweden.

Conventional wisdom has it that the labor market in low unemployment Germany is currently quite healthy. But emp-pop says that there's been no time in all of recorded history when the German labor market has been as healthy as the U.S. labor market was at the depth of the recession. Conventional wisdom also says that Sweden make a comeback from the Nordic Financial Crisis of the early 1990s and learned valuable lessons that helped it whether the Panic of 2007 much better than the world's larger industrialized countries. What emp-pop says is that Sweden has been in a persistent depression for the past twenty years.

He seems to think that people who think this is an important measure of our current economic health are looking for the U.S. to hit some magic healthy economy number.  But that isnt the case at all.  Economists aren't worried about workforce participation because they think a healthy economy requires a rate of 62%.  If we had a strong economy but more people were choosing to stay home with their kids or retire young, no one would call that a recession (though it might raise other concerns).  The issue is when the economy is tanking and most of the people dropping out of the workforce first got fired and then spent a year fruitlessly looking for a new employer.  Traditional unemployment numbers aren't the right ones to look at because they dont count people who would gladly take a job if they thought they could get one but have given up looking. 

Bottom line: the stable long-term differences between economies reflect structural differences and different work-leisure choices.  Sudden dramatic changes during an economic downturn likely reflect the disappearance of jobs, and it isnt wise or helpful to pretend that people giving up hope of finding work isnt a problem.