The overall labor force participation rate (LFRP) remains below its pre-pandemic level: 62.5% in February 2023 vs. 63.3% in February 2020. And disaggregating the data by age reveals some interesting trends.
The LFPR rates for adults 55 and older (in blue) and teens (in red) form the double-helix-like graph above. A few things stand out: First, teens were more likely to be in the labor force than seniors prior to the Global Financial Crisis in 2007. In August 1989, the LFPR for teens (57.4%) was almost twice that of seniors (30.1%). However, this gap closed throughout the 1990s and 2000s, and in October 2008 seniors became more likely to be in the labor force than teens.
But this has started to change again. After reaching an all-time low of 32.5% in February 2014, the teen LFPR started to rise again. It’s risen even more steadily after the pandemic, returning to pre-pandemic levels after a year; and in recent months it has reached its highest level since 2009. In contrast, the share of seniors in the labor force dropped after the pandemic and has shown no sign of recovery; in February 2023, it stood at its lowest level since before the Global Financial Crisis.
Two key pandemic trends are driving this. First, many older workers left the labor force during the pandemic due to health concerns or rising asset values. Miguel Faria e Castro has estimated that there were more than 2.4 million excess retirements from February 2020 to August 2021. Second, the tight labor market has led to more job opportunities for teen workers; with wages up and firms more willing to train and employ teens, college enrollment has declined and more teens are moving into the workforce.
How this graph was created: Search FRED for “Labor Force Participation Rate – 55 Yrs. & over.” Click “Edit Graph,” open the “Add Line” tab, and add “Labor Force Participation Rate – 16-19 Yrs.”
Suggested by Nathan Jefferson.