Definition of Labor Force Participation Rate





What is the definition of "labor force participation rate"? What does "labor force participation rate" mean?

According to the U.S. Bureau of Labor Statistics, the labor force participation rate is the "share of the population 16 years and older working or seeking work."

According to the site, the formula for determining the "labor force participation rate" is:

-- financial term definition - labor force participation rate --(Civilian Labor Force / Total Non-institutionalized Civilian Population) x 100

Ok - this may be a bit confusing, so let's explain these terms a bit.

First off, what is the "total non-institutionalized civilian population"?

This is the total population minus a few key groups, including:

-kids under the age of 16
-people in prisons or other institutions
-military personnel

Ok - now what is the "civilian labor force"?

This group consists of people who are classified as being either employed or unemployed.

A key item to note - you have to be actively looking for a job in order to be considered "unemployed".

So, for instance, a woman who stays at home with her kids is not considered as being employed or unemployed.

Or, students or people who have retired early are not considered to be employed or unemployed as well.

So, again, in order to get the "labor force participation rate", we have to divide:

The Civilian Labor Force by The Total Non-Institutionalized Population and then multiply by 100.

The labor force participation rate has hovered around 65-67 over the past decade or so. It is currently sitting at 65.5.

The rate has increased dramatically over the past 50 years or so due to more women entering the workforce.

For comparison's sake, the labor force participation rate was around 58-59 in the late '40s.

Source: Bureau of Labor Statistics






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