Fewer Americans in the workforce, at a glance

AP News
Posted: Jan 12, 2014 10:04 AM

The share of Americans in the workforce has reached its lowest point in 35 years. It's a sign of both an aging population and of unemployed people who have given up on dispiriting job hunts.

The drop could accelerate as more Americans who have been out of work for more than six months lose their unemployment benefits. Late last month, a federal program that provided aid for the long-term jobless expired. About 1.3 million people immediately lost benefits. Many more will do so in coming months. Congress is debating whether to renew the extended benefits, which paid an average $256 a week.

As a requirement to receive unemployment benefits, recipients need to actively look for a job. With their benefits now cut off, many of the long-term unemployed will likely stop looking for a job. Once they do, they'll no longer be counted as unemployed and no longer part of the labor force.

A gauge known as the labor force participation rate measures the proportion of working-age adults who either have a job or are looking for one. This rate fell to 63.2 percent last year, its lowest level point since 1978, according to the Labor Department.

The rate had peaked at 67.1 percent in the late 1990s. At the time, it was buoyed by a strong economy, the movement of the baby boom generation into its peak earning years and the entrance of more women into the workforce.

The rate's decline has accelerated since the 2008 financial crisis. In part, that's because many boomers are reaching retirement age and the unemployed have struggled to find work.

Economists differ over which one factor best explains the decline in labor force participation. But few dispute that the trend will persist.

The likelihood of landing a job dims substantially after six months of unemployment. And the economy remains 1.2 million jobs shy of the 8.7 million that disappeared after the recession struck.

"The bottom line: The economy is not creating positions for these people," said Robert Shapiro, chairman of the economic advisory firm Sonecon.

Here are changes in labor force participation in five-year increments:

Labor Force Participation
1978 63.2 percent
1983 64 percent
1988 65.9 percent
1993 66.3 percent
1998 67.1 percent
2003 66.2 percent
2008 66 percent
2013 63.2 percent

Source: Labor Department