What Is the Labor Force?
The labor force, or workforce, is the total number of people within a given population who are currently employed plus the number of people who are unemployed and actively seeking work. This group of people is measured by the labor force participation rate, a key metric used by experts to evaluate employment data and gauge current labor market conditions.
Who Is Included In the Labor Force?
The Current Population Survey from the US Bureau of Labor Statistics (BLS) gathers data on this subcategory of the total working-age population. While it counts employees and unemployed, active job-seekers as part of the labor force, it specifically evaluates civilian, working-age adults (16 years and older). This data excludes the following groups:
- Active-duty members of the US military
- People living in skilled nursing homes and other care facilities
- Correctional facility and detention center populations
Who Counts as Employed In the Workforce?
An employed person is typically anyone aged 16 and older who works for pay or profit. This includes full-time, part-time, and temporary work, as well as self-employment. During any given BLS survey reference week, you’re considered an employed part of the labor force if the following apply:
- You’ve completed one paid hour or more of work for an employer or at your own business.
- You’ve performed at least 15 hours of unpaid work at a business owned by a family member.
- You were temporarily absent from work (due to PTO, parental leave, or strike, etc.), but still hold a job.
Essentially, you’re considered employed if you have a job or will return to one in the near future.
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Who Counts as Unemployed In the Workforce?
If you do not have a job, but are available for work and are actively job searching, you’re classified as the unemployed part of the labor force. This survey data includes individuals who have been laid off from work and are waiting to be called back.
To be deemed “actively searching” for work, you must have done any of the following within four weeks of the survey reference timeframe:
- Contact employers, friends, or employment agencies for work inquiries
- Submit resumes or job applications
- Place or answer job advertisements
- Interview for a job
- Perform any other means of an active job search
Passive job searching activities, such as just reading job listings or attending job training sessions, don’t count. To qualify, you must do something that could directly result in a potential job offer.
Who Is Not Included in the Labor Force?
The labor force excludes portions of the population who do not have a job and are not currently looking for one. For the survey, you may not be considered part of the labor force if you:
- Are under 16 years old
- Are currently attending school and not looking for a job
- Have family responsibilities that prevent you from working (e.g. a stay-at-home parent)
- Are retired from your career
- Are uninterested in getting a job for any other reason
To determine whether people are simply uninterested in becoming employed, government agencies collect labor force data on the following:
- Current desire or availability for work
- Reasons for not wanting to work
- Job search activity during the previous year
Why Is Labor Force Data Important?
It’s important to measure and monitor the labor pool because it represents the number of available resources in the job market and the overall health status of the economy. That way, if an industry is experiencing a labor shortage, employers can have a rough idea of how many workers are available.
Labor force trends can change over time, so be sure to keep tabs on the most recent statistics. By leveraging current data and trends in the labor market, HR pros and business leaders can make informed hiring decisions, craft targeted recruitment strategies, and more.
Analyzing Labor Market Trends
It’s normal for the labor force participation rate to fluctuate slightly each month. However, several factors can significantly affect the labor pool, causing bigger changes. Examples of behaviors that commonly influence labor force data include:
- High numbers of high-school grads attending college vs. entering the workforce
- Low numbers of people able to replace workers entering retirement
- Societal expectations that affect who is more likely to enter the workforce (e.g. one parent or caregiver over another)
The labor pool also tends to shrink during economic downturn and other times when people feel their chances of getting a job are slim. For example, the Great Recession of 2008 sent the US labor force participation rate into a steady decline. It went from above 66% in 2007 to around 63% in 2013, where it hovered for the next seven years. In 2020, it crashed to just above 60%, which was most likely due to the effects of the COVID-19 pandemic on businesses.
Layoffs, corporate downsizing, and highly competitive job markets can discourage candidates from applying. So, even though they may be willing and able to work, some stop looking for a job and effectively remove themselves from the labor force.
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