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Report: Labor force drop had pre-recession roots

By WTOP Staff

JIM KUHNHENN
Associated Press

WASHINGTON (AP) — Declaring the Great Recession only partly to blame, White House economists say the increasing number of Americans dropping out of the labor force dampens economic growth and demands policy changes that create more job opportunities and add workers.

In a new report released Thursday, President Barack Obama’s Council of Economic Advisers point to an aging population as the biggest single factor contributing to the lowest participation rate in 36 years. The report also says the elevated unemployment rate, which climbed to 10 percent in 2009, drove workers to put off looking for a job.

But they say other factors might be at play, including long-term declining rates for 24- to 54-year-old men and a more recent decline in the participation in the labor force by women.

The decline in the labor force — currently at 62.8 percent compared to a high of 67.3 percent in 2000 — has been one of the more baffling indicators to emerge during the economic recovery, clouding an otherwise improving jobs picture. The participation rate has declined even as companies have increased hiring and as the unemployment rate has declined.

Obama critics have often pointed to the number of Americans dropping out of the labor force as evidence that his economic policies aren’t working.

But Jason Furman, chairman of the Council of Economic Advisers, said a voluntarily retiring aging population and the trends showing a decline in participation by some workers precede the Great Recession. Indeed, some economists were even predicting the current level of participation before the recession and the financial crisis hit in 2008.

“The participation rate is one of the most puzzling and misunderstood aspects of the economy,” Furman said Thursday.

“But the declining participation rate also subtracts from potential economic growth and exacerbates our future fiscal challenges,” he said.

The report presented the White House with an opportunity to push for its economic agenda.

Furman said the most effective response to a declining labor participation rate would be a comprehensive overhaul of immigration laws that would increase the size of the labor force. The Congressional Budget Office has estimated that an immigration overhaul that passed in the Democratic-controlled Senate last year would add 6 million workers to the labor force by 2023. Republican leaders in the GOP-controlled House have said they do not intend to vote on an immigration bill this year.

Furman said other Obama pushed measures would help, including an increase in the minimum wage and a long-term, $302 billion transportation infrastructure plan.

The report comes just a day after Federal Reserve Chair Janet Yellen testified before Congress that the labor force participation appears weaker than should be expected.

“Demographics and an aging population is driving and should be expected to drive the labor force participation rate down,” she told the House Financial Services Committee. “So the question is, has labor force participation fallen more than would be expected based on demographics? And my personal judgment is yes, it’s fallen somewhat more than that.”

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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