The U.S. labor force participation rate is the percentage of those age 16-years-old and older (who are not active-duty military or institutionalized) that is either employed or seeking employment. The rate does not, however, distinguish between those with full-time and part-time employment. Nor does it account for wages or the types of jobs individuals hold or are seeking (in other words, it does not distinguish between low-paying service jobs and high-paying manufacturing jobs).
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In July 2016, the labor force participation rate was 62.8 percent, down from its all-time high of 67.3 percent in January 2000. One reason for the rate’s decline is an increase in people who have retired. However, a major cause has been the increase in the number of working-age people who have given up trying to find work, following the Great Recession that began in late 2008.
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This so-called ‘discouraged worker’ phenomenon persists to this day. Because the Department of Labor’s official unemployment statistic (the U-3 number, which mainstream media tends to focus on) does not count discouraged workers as unemployed, the labor force participation rate is in some ways a better measure of the state of the economy.
A third Labor Department figure, the U-6, while not measuring those who have given up trying to work, does include both the unemployed and the underemployed, and similarly is a more accurate reflection of employment prospects than the media’s preferred measure.