Key points
- US participation fell from about 66% in 2007 to 63% in early 2020, mainly as baby boomers retired, and briefly to 60% in the pandemic.
- When people stop looking for work they leave the labour force, which lowers the unemployment rate even though no one found a job.
- Rising participation adds workers, which can let jobs grow without pushing wages up as fast.
Example
If 1 million unemployed Americans stop looking for work, the unemployment rate falls by roughly 0.6 percentage points, without anyone finding a job.
In history
Participation recovered from about 60% in April 2020 to roughly 62.5-63% by 2023, helping ease a very tight labour market.
Related terms