Since it takes into account people who have stopped looking for work, the labor force participation rate can be a more reliable figure than the unemployment rate. The labor force participation rate has fluctuated over the years, ranging from a low of 61.7% to a high of 62.3% in September 2002, according to the U. S. Bureau of Labor Statistics (BLS).
This change is due to a variety of long-term economic, social and demographic trends. For instance, the participation rate of women in the labor force almost doubled from 32% to 60% between 1948 and 1998. Additionally, the increase in college attendance among younger people has also contributed to a decrease in labor force participation. The labor force participation rate has been steadily declining since the late 1990s, largely due to the retirement of baby boomers and other demographic changes. During an economic downturn, the labor force participation rate tends to decrease as many dismissed workers become discouraged and stop looking for work. These subtleties are important because labor force participation and unemployment rates are key indicators of economic health. The labor force participation rate is an essential metric when analyzing data on employment and unemployment, as it measures both those actively seeking employment and those currently employed.
It does not include those who are in the military, in prisons, or who are outside the ordinary labor market. According to the Federal Reserve, the proportion of people of working age (25 to 54 years old) in the labor force peaked at 72% in 1995 and declined to 63.7% over the next 25 years. This seemingly contradictory pattern of overall decline in labor force participation, but increases across all age groups, was also evident at the state level. For example, the recent retirement of a large number of people from the baby boomer generation has brought the rate down, while the introduction of large numbers of women into the workforce in the second half of the 20th century increased the rate. This roughly corresponds to some of the downward trends in labor force participation in the 21st century.