As the US began to emerge from the pandemic, many different news sources provided many different explanations for the labor shortage: from childcare disruptions and fear of illness keeping minimum wage workers out of the labor force to a new wave of retirements from older workers.
A previous post looked at the labor force overall, but today we look at changes in the labor force participation rate (LFPR) for specific age groups: 20 to 24 years old, 25 to 54 years old, and 55+ years old. We subtract the LFPR from January 2020 to show the percentage-point change in labor force participation relative to the month right before the pandemic.
When the pandemic hit, the sharpest decline in the LFPR was for workers between the ages of 20 and 24. Their LFPR decreased from 73% to 64.4% in 4 months before increasing again. However, at the end of 2022, the LFPR for 20- to 24-year-olds still hadn’t fully recovered and remained 1.7 percentage points below its January 2020 value.
This overall pattern is similar but less extreme for the other age groups. Although no age group fully recovered by the end of 2022, the 25-54 group was closest, at 0.7 percentage points below its January 2002 level. There’s been much discussion of older workers retiring early (and permanently) during the pandemic, and the 55+ group remained 1.4 percentage points below its January 2020 level as of December 2022, with no sign of further recovery.
How this graph was created: Search FRED for “Labor Force Participation 20-24” and select “Labor Force Participation Rate- 20-24 Yrs.” Click the orange “Edit Graph” button on the right: From the “Add Line” section, add the 25-54 age group by searching for and selecting “Labor Force Participation Rate, 25-54 Yrs.” Repeat this process for the “55 plus” series. All three series should have “Percent” as the units. You must customize each series by subtracting the value for the series in January 2020: From the “Edit Line” section for each age group, use the customize data section at the bottom add the following formulas in the formula bar and hit “Apply”: For 20-24 Yrs, insert a-73.0; for 25-54 Yrs, insert a-83.1; for 55+ Yrs, insert a-40.2. Finally, change the beginning date of the graph to 2018-01-01.