Unemployment sits at 4.2% and the market prints records. And yet labor-force participation at 62.4% is still about a full point below the 2019 high, prime-age participation (25–54) is short of where it was, and employers keep calling it a labor shortage. Barton Swaim's Weekend essay takes the puzzle seriously and argues, provocatively, that the gap is partly cultural — that a meaningful share of the prime-age non-participants are not looking for work and are not expected to.
Swaim lays out the three standard economist explanations for the gap — early retirements, disability-rolls expansion, and long-COVID — and concedes each matters on the margin. But he then walks through a set of survey results from the Bureau of Labor Statistics, Gallup, and the Federal Reserve that he says the economist explanations do not fully cover:
- Prime-age men whose household income has not fallen (spouse, parents, inheritances) reporting no search in the last 12 months.
- A rising share of 20–34-year-olds living with parents who describe themselves as not employed and not looking.
- Stubbornly high DI/SSDI enrollment even as the stated basis for disability shifts.
- A growing cohort of men 55+ who left the labor force in 2020–2022 and have not returned despite strong wages.
Why This Matters For Planning — Not For Allocation
This essay is not going to change our theme weights. It is going to change one or two planning assumptions we carry for client projections, and it is worth being explicit about which:
1. Spousal Re-Entry Is Less Reliable Than Models Assume
Our planning software defaults to assuming that if one spouse retires, the other has a roughly even probability of continuing to work or re-entering. Swaim's numbers suggest, at least in the near-term, that "returning to work after a break" is harder than the base-rate model predicts. We are going to lean conservative on dual-income retirement plans — assume the lower of the two income scenarios unless both spouses are actively employed at the review date.
2. Inherited-Wealth Households Need Real Talk About Depletion
For households where a prime-age adult is supported by family wealth rather than earning — and our book has a few of these — the Swaim dynamic is not theoretical. If that support structure does not produce earned income, Social Security credits are not accumulating. That has knock-on effects at 62/67 that clients often have not modeled. We will flag it explicitly in Q2 reviews where relevant.
3. The "Caregiving Leave" Category Is Larger Than Advertised
A meaningful share of prime-age women off the labor force are caregiving for aging parents, not small children. That is relevant for our CalPERS/CalSTRS clients whose adult children may be providing elder care rather than earning. LTC planning conversations — which we are emphasizing across our CalPERS/CalSTRS book — now need to include a "who pays for the caregiver's lost earnings" variable, not just the direct nursing cost.
Planning-Model Updates
We are not changing any allocations based on this column. We are changing three planning defaults:
- Dual-income re-entry probability — lower from 50% to 30% unless spouse is currently employed.
- Social Security credit assumption — for clients supporting non-earning prime-age adults, flag the SS credit gap.
- LTC model — add caregiver-lost-earnings line to the LTC conversation.
These are small but they matter when the plan runs to age 95. If your last review used the defaults, we can re-run with the new assumptions in fifteen minutes.