Labor Force Participation: Recent Developments and Future Prospects

More than five years after the Great Recession ended, the labor market has, by many metrics, finally shown substantial improvement. The unemployment rate is now nearly 4 percentage points below the peak reached in late 2009, and the number of nonfarm payroll jobs has returned to pre-recession levels. However, one lingering concern is the ongoing decline in the labor force participation rate and the concomitant absence of a significant rise in the percentage of the working-age population who are employed. In particular, the labor force participation rate has fallen from about 66 percent of the population in 2007 to about 63 percent over the first half of 2014, while the employment-to-population ratio currently stands at 59 percent, only about 1/2 percentage point above its low point in the wake of the recession.