Labor Force Participation Rate Continues To Hit Multi-Decade Lows

The Labor Force Participation Rate - 1948 - 2014 - Chart / GraphOne of the most alarming statistics that presents itself in the pages of the monthly employment reports from the Bureau of Labor Statistics is the ever-dwindling labor force participation rate.

The "labor force participation rate" is calculated by taking the civilian labor force and dividing it by the total non-institutionalized civilian population.

The non-institutionalized civilian population consists of those Americans over the age of 16 who are not in the military or in prison or other institutions. The civilian labor force, on the other hand, represents the members of the civilian non-institutionalized civilian population who are either working or looking for work.

In August's employment report, the unemployment rate dropped to 6.1%. The reason? 268,000 people left the labor force, bringing the total number of people "not in the labor force" (meaning neither working or actively looking for work) up to a staggering 92,269,000 people.

As the number of people "not in the labor force" continues to trend higher, the labor force participation rate continues to fall. In August, the labor force participation rate was 62.8%, which represents the lowest levels seen since 1977. From the early '50s to early 2000 the labor force participation rate grew and grew and grew, largely due to the fact that so many women were entering the labor force. The labor force participation rate hit a high of 67.3% and has been basically going downhill ever since.

The difference between 67.3% and 62.8% may not sound like too much, but it represents an IMMENSE number of Americans who are now out of the civilian labor force.

If you want a true story of the labor picture in the United States, the labor force participation rate gives a much better picture than monthly nonfarm payroll numbers or the national unemployment rate.

Source: Labor Force Participation Rate Graph

Filed under: General Knowledge

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