Labor Force Participation Rate

The labor force participation rate is the proportion of eligible people in the population who are involved in the labor force. The U.S. Bureau of Labor Statistics (BLS) defines the labor force as people over age 16 who are either employed or unemployed but looking for a job. People unemployed and not looking for work are not included in the labor force. Also not included are people in the U.S. Armed Forces or in institutionalized groups (penal facilities, mental facilities, and group homes). The overall U.S. labor force participation rate fluctuates seasonally but usually ranges between 66 percent and 68 percent. Demographic shifts in the population, economic cycles, and cultural changes further influence the labor force participation rate.

The most substantial shift in labor force participation in the past several decades has been the increasing participation of women. Women's increased educational attainment and reduced propensity to marry at young ages have contributed to this surge. In 1975, only 46.3 percent of women participated in the labor force compared with 59.4 percent in 2006. Though women's labor force participation has increased, it remains lower than men's participation rate (73.5 percent in 2006). However, the BLS projects that the gender gap in labor force participation will continue to narrow through 2014.

Labor force participation differences by race/ ethnicity are not as great as gender differences. Though the current pattern of white men and women parallels the overall gendered labor force participation rates, the African American gender gap is much smaller (about 67 percent for men and 62 percent for women). Of the race/ethnic-gender groups tracked by the BLS, Hispanic men have the highest labor force participation rate (about 80 percent) and Hispanic women have the lowest (about 56 percent). Due to [Page 531]immigration and fertility rates of Hispanic groups, the U.S. Hispanic population is younger than the overall population. As these cohorts age, the BLS projects 24 percent of the labor force will be of Hispanic origin by 2050.

Labor force participation rates vary through the life course, increasing from youth to the peak work ages (25 to 54) and declining as people retire. As the large baby boomer generation (people born between 1946 and 1964) ages, the median age of the labor force is increasing and the overall labor force participation rate is expected to decline. As baby boomers retire, the labor force will decline, thus increasing the economic dependency ratio (i.e., the number of people in the total population who are not in the labor force per 100 people who are). Many social scientists are concerned the economy will not be able to maintain necessary production levels of goods and services as the labor force participation rate declines with baby boomer retirements.