I think generally what is going on here is that the "prime age workers" category is a source of data that is seemingly credible but is currently providing a false signal for LFP pessimism. Frankly, I think an article using "prime working age" to make pessimistic points about LFP mostly just informs the reader of two things. (1) The author has a preconception that LFP has been especially bad and that the unemployment rate understates problems in the labor economy, and (2) the author hasn't taken some very basic disciplined steps to check their preconception.
I don't mean to be too harsh. This is an example of how difficult analysis of the economy is. We are all engaged in a battle against our own self-dealing misconceptions and lack of understanding. If we're lucky, we might occasionally find a window into the chaos that gives us a slightly less misinformed viewpoint.
|from Sober Look|
This could be pulling the labor force participation levels down for 50-65 year olds in the US in a way that makes demographics much more of a dampener here than it is in Canada, without appearing in the age group data as a significant deviation from trend.
Here are comparisons of male labor force participation that I found at Fred. Much of the gap appears to be coming from the older age group that is most heavily affected by disability programs in the US. Participation is actually growing in this group, but not as sharply as in Canada.
|from Sober Look|
The change in trend among less than high school workers is sharp enough that there is probably some policy or cyclical issue at work, but this could be similar to the disability issue, in that this is a category deceptively influenced by baby boomer demographics. Here is a graph of educational attainment over time from this article. This category is skewed toward older workers, so this is not a measurement that we would expect to be stable over time. This peak in LFP for this category could mostly be a product of a mass of "less than high school" workers reaching ages that peaked in typical LFP in the 2000's. Actually, thinking about it, this is probably much more of a factor than policy issues. Less than high school education level is fairly stable at around 11% for all age groups under 65 years. But, for 65+, it's about 19%. So, as there is generally an age-related decline in aggregate LFP, this group should have been seeing more of a demographic decline, since there is an especially large number of these workers who are now over 65. I'm surprised that LFP in this group didn't begin declining earlier. And, I would expect the demographic factor to be largely baked in at this point. If this is simply demographics, we should see this group's LFP stabilize.
I still think a careful look suggests structural issues over cyclical ones, although even if the issue among the less than high school workers is structural, the structural and cyclical issues are intertwined.