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The demographics of the activity rate decline


Many are lamenting the record lows in the labor force participation rate (or activity rate). The debate is whether this decline is cyclical or structural. The structural view has much to do with demographic shifts as the population gets older on average, so let’s look at the rates for different age groups.

We see a strong drop in participation by young men, likely reflecting a larger share who are staying in school longer. Older men’s participation hasn’t changed much. The bulk of the overall decline comes from middle-aged men. They are the largest group and have the largest impact. But their participation has been declining throughout the sample period, so it is not a new phenomenon for them.

For women, the story is very different because of their large increase in labor force participation up until the end of the past century. Older women are still increasing their participation, but recent declines for younger women seem to mirror the declines for men. So, the recently accelerating decline in the overall participation rate may have to do with women’s participation just not increasing like it used to.

How these graphs were created: Search for “Activity Rate,” then use the tags to limit the series to “Nation,” “USA,” and then “Males” or “Females.” Select the series and then add them to the graphs. Depending on the order of the series in the search results, you may have to adjust line colors to make them consistent in the two graphs.

Suggested by Christian Zimmermann

View on FRED, series used in this post: LRAC24FEUSM156S, LRAC24MAUSM156S, LRAC25FEUSM156S, LRAC25MAUSM156S, LRAC55FEUSM156S, LRAC55MAUSM156S


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