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The labor-force participation rate measures the percentage of the civilian noninstitutional population age 16 and older that is either employed or unemployed under Bureau of Labor Statistics definitions.
What is the labor force?
BLS defines the civilian labor force as people age 16 and older who are classified as employed or unemployed. Conceptually, it includes people who are working and people who are actively looking for work.
Who is outside the labor force?
People can be outside the labor force for many reasons, including retirement, school, caregiving, disability, discouragement about job prospects, or simply not wanting a job at the time.
Someone without a job is not automatically counted as unemployed. To be classified as unemployed, a person generally must be available for work and have actively looked for work recently, or be on temporary layoff.
Participation vs. unemployment
The unemployment rate uses the labor force as its denominator. The participation rate uses the broader civilian noninstitutional population.
That distinction is important. If people stop actively looking for work, they can move from unemployed to outside the labor force. The unemployment rate could fall even if employment does not rise.
Why participation changes over time
Participation can change because of:
- population aging and retirement,
- school enrollment,
- childcare or caregiving responsibilities,
- health and disability,
- economic conditions,
- immigration and population growth, and
- changes in job opportunities or wages.
Prime-age participation
Analysts often look separately at participation among adults ages 25 to 54. This “prime-age” measure reduces some of the effect of retirement and school enrollment and can help show how strongly working-age adults are connected to the labor market.
Participation is not a score of economic success
A higher participation rate is not always automatically “better.” Retirement, education, caregiving, and other choices can be legitimate reasons not to participate. The useful question is why participation is changing and whether people who want work can find it.
How participation helps explain the jobs report
When unemployment changes, check participation at the same time. A rising unemployment rate accompanied by rising participation can mean more people are entering the labor force and searching for work. A falling unemployment rate accompanied by falling participation can mean fewer people are actively engaged in the labor market.
Continue learning
Read Unemployment Rate Explained, visit the Jobs & Wages hub, and use the Economic Data Center.
Sources & methodology
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Sources, dates, and methodology matter.
EconomicHQ prioritizes primary sources for consequential financial and economic claims and identifies reporting periods for changing information. This article is educational and does not provide individualized financial, investment, tax, legal, or credit advice.