Signs of the problem surfaced Friday in a jobs report that showed U.S. labor force participation rates falling in March to the lowest level since 1979, combined with an unexpectedly large number of workers who entered the disability program during the recession and its aftermath, The Wall Street Journal reported Monday.
The flight of workers, since the recession, to the Social Security Disability Insurance program accounts for as much as a quarter of the drop in participation rates, Michael Feroli, J.P. Morgan's chief U.S. economist estimates.
The unemployment rate in Friday's report fell to a four-year low of 7.6 percent, which reflected workers leaving the workforce, the newspaper said.
Federal Reserve Chairman Ben Bernanke has worried the financial crisis would lead to a permanent loss of workers, but it is no longer a hypothetical problem, Massachusetts Institute of Technology professor David Autor said, noting many newcomers to the disability program are low-wage earners with limited skills and are "pretty unlikely to forfeit economic security for a precarious job market."
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