How Far Is Labor Force Participation from Its Trend?

Hornstein, Andreas; Kudlyak, Marianna; Meisenbacher, Brigid C.; Ramachandran, David

Journal Article

How Far Is Labor Force Participation from Its Trend?

Abstract: Labor force participation in the United States has dropped a percentage point since the pandemic began. Analyzing how participation has evolved for various groups of the population suggests that more than two-thirds of this decline has been due to persistent “trend” factors. The remainder is due to temporary economic conditions, or “cyclical” factors. Estimates project that trend factors—driven largely by population aging—could push labor participation down an additional percentage point over the next decade.

Keywords: labor force participation; pandemic; covid19; unemployment;