Labor Force Participation Rate: What It Tells Us About the Economy

What Is Labor Force Participation?

The Labor Force Participation Rate (LFPR) measures the percentage of the working-age population (16+) that is either employed or actively seeking employment.

LFPR vs Unemployment Rate

Why LFPR matters more sometimes: The unemployment rate can fall simply because people stop looking for work. LFPR tells you if people are even in the game.

Top Data Sources

1. BLS Current Population Survey

IQ Score: 97

• FRED Series: CIVPART (headline rate)
• Monthly survey of 60,000 households
• Age, gender, race breakdowns available

2. Prime-Age LFPR (25-54)

IQ Score: 96

• FRED Series: LNS11300060
• Excludes students and retirees
• Better gauge of true labor market health

3. OECD Labor Statistics

IQ Score: 94

• International comparisons
• Standardized definitions
• Working-age population (15-64)

Key Trends to Watch

Long-term Decline

US LFPR peaked at 67.3% in 2000 and has trended down due to:

• Aging population (Boomers retiring)
• Rising disability rates
• Increased college enrollment
• Opioid epidemic effects

Pandemic Impact

LFPR crashed from 63.3% to 60.2% in April 2020—the lowest since the 1970s.

Recovery Pattern

Watch for:

• Prime-age LFPR recovery (now back to pre-pandemic levels)
• 55+ participation (still lagging)
• Women's participation recovery

Series to Download

Using LFPR in Analysis

Adjusting for Demographics

Use prime-age LFPR when comparing across decades to account for aging population.

International Comparison

Use OECD data with 15-64 definition for apples-to-apples comparisons.

Recession Indicators

LFPR is a lagging indicator—it tells you about damage after the fact, not predictions.

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