Academic journal article Monthly Labor Review

Projections of the Labor Force to 2050: A Visual Essay

Academic journal article Monthly Labor Review

Projections of the Labor Force to 2050: A Visual Essay

Article excerpt

The U.S. labor force, which consists of people who are either employed or actively seeking employment, has undergone tremendous change in the last six decades. Over this period, the high labor force growth rate of the 1970s to 1990s was replaced by a much lower growth rate since 2000. Major demographic factors--including slower population growth, the aging of the U.S. population, the leveling off of the labor force participation rate, and increasing diversity within the population--have been responsible for these changes. BLS long-term projections point to a slower rate of growth of the labor force over the next four decades.

A series of charts in this visual essay presents an overview of the trends in the civilian labor force and civilian labor force participation rates for a period of 100 years from 1950 to 2050. These charts highlight the dramatic changes that have affected the labor force in the past and how these changes will shape the labor force in the coming years. The historical 1950-2011 demographic data are based on the Current Population Survey. (1) The 2008 National Population Projections have been used as the basis for the BLS long-term labor force projections. (2) These labor force projections are a continuation of the 2010-2020 medium-term labor force projections, which can be found on the BLS website at http://www. Bls.gov/opub/mlr/2012/01/art3full.pdf.

The slower growth of the labor force over the past two decades, especially since 2000, is mainly the result of two intertwined factors:

* Slower growth of the population. Population is the single most important factor in determining the size and composition of the labor force. The slower growth of the population is primarily the result of the aging of the U.S. population.

* A downward trend in the labor force participation rate. After nearly five decades of steady growth, the overall participation rate--defined as the proportion of the civilian noninstitutional population in the labor force--peaked at an annual average of 67.1 percent for each year from 1997 to 2000. Since then, the labor force participation rate declined gradually, falling to 64.1 percent by 2011, a drop of 3.0 percentage points. By September 2012, the rate had dropped further, to 63.6 percent.

Some important factors that have reduced the labor force participation rate are the following:

* Participation of the baby boomers. The overall labor force participation rate is on the decline as roughly 77 million baby boomers gradually move from the prime age group of 25-to-54-year-olds with its high participation rate (above 80 percent) to older age groups with much lower participation rates (around 40 percent for the age group 55 and older).

* The declining participation rate for the 25-to-54 age group. Although this group exhibits the strongest attachment to the labor market, the participation rate for this age group has been declining since 2000, and the rate is projected to decline further in the future.

* The declining participation rates for teenagers and young adults. The participation rates of both 16-to-19- and 20-to-24-year-olds have decreased sharply over the past several decades, and their rates are expected to decline further, although at a slower rate.

* The decreasing participation rate of women. The participation rate of women peaked in 1999 after several decades of strong growth. Since then, their rate has been declining slowly and is expected to continue to post small declines in the future.

* The declining participation rate of men. The participation rate of men has been steadily declining since its high point in the 1940s, and this trend is projected to continue throughout the coming decades.

The participation rate, like other labor market indexes, is affected by cyclical, structural, and demographic factors. Cyclical changes are changes that happen in response to business cycles and are generally short term. …

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