Civilian Labor Force

Key Takeaways

• The civilian labor force includes working-age adults who are employed or actively seeking employment.
• Military personnel, retirees, and discouraged workers are not considered part of the civilian labor force.
• The official unemployment rate may understate true unemployment by excluding discouraged and part-time workers.
• The labor force participation rate peaked at 67.3% in 2000 and has fluctuated since.
• Baby boomers' retirement has contributed to a decline in labor force participation.

What Is the Civilian Labor Force?

The Bureau of Labor Statistics (BLS) defines the civilian labor force as working-age civilians who are employed or available for work, excluding active-duty military and many government workers. It is a central gauge of employment trends and economic health. The measure is debated because it excludes groups such as discouraged workers who have stopped looking for jobs.

Breaking Down the Civilian Labor Force

According to the BLS, the civilian labor force is made up of two components:

Civilian workers: This category includes all private sector, state, and local government workers. Workers—or "employed persons" in the language of the Current Population Survey—are defined as people 16 years old or older who did at least one hour of paid work (or unpaid work in their own business) in the survey's reference week, or who did at least 15 hours of unpaid work in a family business. Active-duty military personnel, institutionalized individuals, agricultural workers, and federal government employees are excluded.

Unemployed people: An unemployed person must have been available for work during the survey's reference week (discounting temporary illness) and made "specific efforts" to find a job during the previous four weeks.

Thus, people who would like to work but have given up looking due to a lack of opportunities, an injury, or illness are not counted as part of the civilian labor force.

How the Unemployment and Participation Rates Work

The unemployment rate published by the government is defined as the unemployed population divided by the civilian labor force.

However, the government's definition of the labor force is at odds with colloquial usage and could be seen as understating the true unemployment rate. It does not count people who have given up looking for work or are handicapped.

Beyond U-3: Exploring Alternative Unemployment Measures

The standard unemployment rate published by the BLS is the U-3. The Bureau releases other indicators of joblessness, the most comprehensive being the U-6 rate, which some economists consider the "real" unemployment rate.

The U-6 rate includes people who are employed part-time but would prefer full-time work as well as discouraged and "marginally attached" workers who have looked for a job within the past 12 months but not in the past four weeks.

The BLS also calculates the civilian labor force as a share of the entire civilian population. That includes everyone age 16 or older who is not institutionalized or on active duty. This measure, called the civilian labor force participation rate, rose consistently from 58.6% at the beginning of 1965 to a peak of 67.3% at the beginning of 2000. It fell steadily from that point, with a particularly notable drop recorded at the beginning of 2020—the period when lockdown measures were introduced to tackle the COVID-19 outbreak.1

Since then, the rate has been steadily rising.2

The Impact of Baby Boomer Retirements on the Labor Force

An increase in the rate of retirement has a negative effect on labor force participation rates. In recent years, the baby boomer generation, which fueled America's productivity during much of the 1970s and 1980s, has begun retiring, causing a drop in the labor force participation rate.

Recessions and the automation of jobs also adversely impact the labor force participation rate.

Who Are the 'Discouraged Workers' Who Aren't Counted as Unemployed?

Discouraged workers, as defined by the U.S. Department of Labor, are people who have not looked for work in the past four weeks or more because they believe there is no chance that they'll be successful.

They are certainly unemployed but they aren't counted in the most-commonly-quoted unemployment rate, formally called the U-3.

Another rate published by the BLS, the U-6 rate, included these discouraged workers.