Points of View

Who is Out of the Labor Force Anyway?

Sam Stebbins

This blog post refers to an economic analysis by the Hamilton Project with the Brookings Institute. This report can be read here.

Last month, the Hamilton Project and the Brookings Institute released an economic analysis which explores the nation’s labor force participation rate. The report explains who is not participating in the labor force, what their households look like, and their reasons for being out of work.

The labor force participation rate is an indicator for “household living standards and economic vitality,” as Brookings reports, and “is the key channel through which Americans contribute to and benefit from the economy.” Since 1999, the number of nonparticipants has been increasing steadily. In 2016, over one third of all adults in the US were not participating in the labor force. This is a topic that Talent 2025 has investigated recently in our Labor Force Participation Rate Research Brief

 

Who are Nonparticipants?

Overall, women with high school educations or less make up the largest group of nonparticipants. Of those, most women report that caregiving is their reason for being out of the labor force.

Caregivers aside, the reasons for nonparticipation are more even for males and females: about 30% are ill or disabled, 8% are students, and 5% are early retirees. In addition to the significant difference in reason between men and women, the households they live in vary. Most men out of the labor force live with their parents, while most women out of the work force live with a partner.

The growing number of 16-24 year olds out of the labor force is due in part to the increase in those attending school. Among this age group, 81% of nonparticipants are delaying work in favor of higher education.

Brookings also analyzed how nonparticipants get by financially. They found that while three quarters of those out of the labor force live in a household with another person earning income, 1.3 million Americans have no income, either earned or unearned.

 

What Can Employers Do?

Nonparticipants have a variety of reasons for unemployment, but employers can take action to make their workplaces friendlier to potential employees. Issues such as childcare and transportation can be addressed by employers to encourage labor force participation. Take a look at the Labor Force Participation Research Brief Talent 2025 published in July, or the Workforce Development Report released in February to learn more about labor force participation in West Michigan.