Labor force participation is stagnating, and some workers may never come back.


The share of Americans who are either working or looking for jobs remains well below pre-pandemic levels, data released Friday showed, a sign that many working-age adults have been pushed onto the labor market’s sidelines as the health crisis persists.

Questions loom over whether and when the participation rate — the share of Americans who are employed or applying for work — will rebound. It held steady at 61.5 percent in December, down about 1.8 percentage points from February 2020. For people in their prime working years, which the Bureau of Labor Statistics defines as 25 to 54 years old, labor force participation is hovering around 81 percent, down 1.9 percent compared with February.

The drop in participation has been slightly greater for women as service-sector jobs take heavy losses and as child-care duties disproportionately weigh on their ability to work. For prime-age women, participation had declined to 75 percent in December from 77.1 percent in February. For men, it was at 87.3 percent, down from a pre-pandemic 89.1 percent.

It could be good news that the rate remained roughly stable in December relative to the prior month even as job losses resumed — suggesting that people weren’t growing discouraged and giving up on work altogether as the public health situation worsened.

But policymakers are worried that some workers may never come back. That would leave households with less income and the economy as a whole with less potential productive capacity. A desire to avoid such long-term scarring has spurred both Congress’ major spending packages and the Federal Reserve’s low-interest rate policies.

“Participation in the labor market remains notably below pre-pandemic levels,” Jerome H. Powell, the Fed’s chair, said at his December news conference. “Although there has been much progress in the labor market since the spring, we will not lose sight of the millions of Americans who remain out of work.”



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