The labor force participation rate of 63 percent in January underscores how the job market has recovered slowly and partially since a deep recession ended in 2009.
The labor force participation rate — the share of people who are 16 or older and either working or actively seeking employment — was above 67 percent for parts of 2000 and 2001 amid a strong economy and higher than 66 percent as recently as 2008. The participation rate has been at or below 63 percent in each of the four months from October to January, a level last seen in 1978.
Demographic changes, including an aging population and workforce pool, have contributed to the decline in the rate, though “poor prospects in the labor market seem to have had an unusually large effect in recent years,” the Congressional Budget Office said in a report released yesterday.
While the unemployment rate has been falling (it was 6.6 percent in January), “a significant part of that improvement is attributable to a decline in labor force participation that has occurred as an unusually large number of people have stopped looking for work,” the CBO report said. And the jobless rate is still high by historical standards.
“Unemployment rates for all major categories of workers have declined over the past several years, reversing between half and three-fourths of their earlier increases, but they are still high,” the report said.
There are other signs of labor-market underperformance. There are about 4 million people who have been out of work for more than 26 consecutive weeks, compared to about 1.3 million before the recession began in December 2007, according to CBO.