(Paul Kedrosky) AI, Immigration, and Collapsing Labor Force Participation

The U.S. labor force participation rate has quietly returned to levels last seen in the 1970s (outside the recent pandemic). It increasingly seems to signal a structural shift in how society works, with a shrinking share of adults participating directly in the production of goods and services. The consequences extend well beyond slower economic growth.

Some implications:

• A growing share of U.S. society has no direct stake in labor markets.
  • As fewer adults work or seek work, a larger fraction of voters experience the economy mostly as consumers, retirees, or rentiers, not as workers.
  • That changes political incentives around wages, immigration, AI, taxation, and redistribution.
• The economy becomes increasingly dependent on a shrinking core.…

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