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Labor Force Participation Rate
What Is the Labor Force Participation Rate?
The labor force participation rate is an estimate of an economy’s active workforce
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In the 12 months ending Dec
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S
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4% and a high of 61
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and Dec
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S
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From 2013 on, the monthly figures held steady in the vicinity of 63%, after a sharp decline in
the wake of the Great Recession
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4% to 61
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Its low point was reached in April 2020, when the rate sank to 60
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KEY TAKEAWAYS
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The labor force participation rate indicates the percentage of all people of working
age who are employed or are actively seeking work
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Starting in 2013, the U
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labor force participation rate held steady around 63% until
the COVID-19 pandemic struck
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9% as of Dec
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The rate varies over time based on social, demographic, and economic trends
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Understanding the Labor Force Participation Rate
The labor force participation rate is an important metric to use when analyzing employment
and unemployment data because it measures the number of people who are actively
job-hunting as well as those who are currently employed
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It includes all other
people age 16 or older and compares the proportion of those who are working or seeking work
outside the home to those who are neither working nor seeking work outside the home
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The
unemployment numbers do not take into account those who have given up looking for work
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Trends in the Participation Rate
Over the long term, the labor force participation rate has changed based on economic, social,
and demographic trends
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3% in April 2000
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61
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S
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2021, according to the Bureau of Labor
Statistics
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In the
long run, industrialization and the accumulation of wealth can have an impact
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High
levels of accumulated wealth can reduce participation because wealthier people simply have
less need to work for a living
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During an economic recession, the labor force participation rate tends to fall because many
laid-off workers become discouraged and give up looking for jobs
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Social factors
The trend in the women’s labor force participation rate largely parallels the long-term trends
for the total population
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The women’s participation rate has since dropped
as a result of the COVID-19 pandemic to 56
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2021, from a trend rate of nearly 60%
pre-pandemic
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As large age cohorts enter retirement age, the labor force participation
rate can fall
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According to the Federal Reserve, the share of prime-working-age people (25 to 54 years old)
in the labor force peaked at 72% in 1995 and declined to 63
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This
roughly corresponds to some of the declining trends in labor force participation in the 21st
century
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College enrollment by 18- to 24-year-olds increased
from around 35% to 41% from 2000 to 2018
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8% from fall 2019 to fall 2021
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According to the
World Bank, the global labor force participation rate stood at 58
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4% in 2010
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The countries with the lowest labor force participation rates (of 40% or below) were
Yemen, Jordan, Algeria, Moldova, and Tajikistan, plus the U
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territory of Puerto Rico
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It takes into account people who have stopped looking for work but still want to work,
unlike the unemployment rate
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For instance, the
recent retirement of baby boomers in great numbers has pushed the rate down, while the
introduction of large numbers of women into the workforce in the second half of the 20th
century increased the rate
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S
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How Does the U
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Rate Compare With Those of Other Countries?
The most recent global data dates to 2020, and it shows the U
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pretty much in the middle of
the pack at 61%, two points ahead of the world rate of 59%
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As of Dec
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S
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