Labor Force Participation Rate
The percentage of the working-age population that is employed or actively looking for work.
What is Labor Force Participation Rate?
The labor force participation rate (LFPR) measures the share of the civilian noninstitutional population aged 16 or older that is either employed or actively seeking work. It captures how many people are engaged with the labor market, complementing the unemployment rate. A declining LFPR can indicate workers retiring, enrolling in school, becoming discouraged, or leaving the workforce for other reasons. Because the LFPR excludes discouraged workers who have stopped looking, it can fall even as the headline unemployment rate stays constant — sometimes masking labor market weakness. The LFPR peaked in the US at around 67% in early 2000 and has declined significantly since.
Example
US labor force participation fell from 63.3% in February 2020 to a low of 60.2% in April 2020 during COVID lockdowns. Despite unemployment falling to 3.5% by 2023, the LFPR had only recovered to about 62.5%, well below pre-pandemic levels, partly reflecting earlier retirements during the pandemic.
Source: Bureau of Labor Statistics — Labor Force Participation