Despite spectacular job growth over the past 22 months, the U.S. labor-force participation rate is still 1.1 percentage points — which amounts to about 1.8 million people — short of where it was on the eve of the pandemic in February 2020.
The labor-force participation rate is the number of Americans 16 and older who either have jobs or are actively looking for them, divided by the population 16 and older. (Uniformed military personnel and those confined in prisons and other institutions are excluded from both sides of the equation.) The fact that participation is still so much lower, even as the unemployment rate moves close to pre-pandemic levels — it was 3.8% in February, versus 3.5% in early 2020 — is both an explanation for some of the strange things going on in the labor market these days and a phenomenon that itself calls out for explanation.
