Issues

Labor force participation during recent labor market downturns

U.S. Department of Labor

Bureau of Labor Statistics

Summary 03-03 September 2003

in Labor Statistics

1

 The National Bureau of Economic Research

(NBER), the generally recognized arbiter of

business cycle turning points, designated March

1991 as the trough of the recession that began in

July 1990. Although this recession thus officially

ended in March 1991, labor market conditions

continued to be sluggish until late 1992. NBER

designated March 2001 as the starting date of

the most recent recession and November 2001

as the endpoint. Labor market conditions again

remained sluggish well after the official trough

of the recession. This paper compares data for

the quarter containing the NBER-designated

peaks to the sixth quarter after the official NBER

troughs.

2

 Social Security Bulletin: Annual Statistical

Supplement, 2002, U.S. Social Security Administration, December 2002.

The longest postwar expansion in the

Nation’s history ended when the economy

entered a recession in March 2001. Subsequently, the labor force participation rate—the

proportion of the civilian noninstitutional

population in the labor force—fell, with

declines occurring among youths aged 16 to 24

and workers in the 25 to 54 years age group.

These declines are in contrast to the labor market

downturn of the early 1990s, during which the

dropoff in labor force participation was much

smaller.1

The sharpest decline in labor force participation between the first quarter of 2001 and the

second quarter of 2003 occurred among persons

aged 16 to 24. During this period, which ran

from the quarter containing the prerecession

peak to six quarters past the official recession

trough (November 2001), the participation rate

for this group fell by 3.6 percentage points,

compared with a decline of 0.6 percentage point

between the third quarter of 1990 and the third

quarter of 1992. Participation rates during the

most recent labor market downturn also

declined among both women (from 76.8 to

75.9 percent) and men (from 91.6 to 90.7

percent) aged 25 to 54. By comparison, during

the early 1990s, the rate for women in that age

group actually continued to rise, increasing

from 74.0 to 74.7 percent, while the rate for

men was little changed. (See chart.)

Partially offsetting the declines in participation among the other age groups, the labor force participation rate for individuals aged

55 and older rose by 2.8 percentage points over

the most recent recession and the year and a

half following. During the early 1990s, the participation rate for this group edged down a little.

The rise in labor force participation rates among

older workers may reflect several factors that

affect work and retirement decisions such as

changes to Social Security regulations, falling

stock market prices, and declining interest rates.

Other data support findings

According to annual work experience data collected in the March rounds of the Current

Population Survey, the proportion of individuals aged 16 to 24 who neither worked nor

looked for work was higher in 2001 (30.3 percent) than it was in 1991 (25.4 percent). Youths

who did not work or look for work in 2001

were more likely than their counterparts in

1991 to have reported going to school as the

reason they were not in the labor force. (See

table.) Consistent with the recent rise in their

labor force participation rates, the proportion

of nonparticipants aged 55 and older declined

from 65.1 percent in 1991 to 61.7 percent in

2001.

Among persons aged 25 to 54, some 17.1

million individuals, 14.0 percent of the population, neither worked nor looked for work at

any time during 2001, up from 13.4 percent in

1991. The proportion of out-of-labor-force

women aged 25 to 54 who reported that they

did not work because they were ill or disabled

rose from 12.6 percent in 1991 to 21.9 percent

in 2001. Over that period, the number of women

receiving Social Security disability benefits

more than doubled, and the share of female

beneficiaries who were less than 55 years of

age increased.2

The proportion of males aged 25 to 54 who

did not look for work and reported that they

were retired rose from 5.8 percent in 1991

to 10.1 percent in 2001. The proportion who

said that they did not work or look for work

because of home responsibilities also increased

Percentage points

Change in labor force participation rate during recent 

economic downturns, by age and sex 

-4

-2

0

2

4

Both sexes, 

16-24

Men, 25-54 Women, 25-54 Both sexes, 55

and over

QIII:1990 to QIV: 1992 QI:2001 to QII: 2003

and older

QIII:
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Table 1. Persons who did not work or look for work by age, sex, and reason for not

working in 1991 and 2001

(Number in thousands)

slightly, from 4.6 percent to 8.8 percent.

In summary, during the most recent economic downturn, the labor force participation rate among younger workers fell quite a

bit more than it did during the recessionary

period of the early 1990s; workers in that age

group were more likely to have reported “going to school” as a reason for nonparticipation

in 2001 than their counterparts had been a

decade earlier. The labor force participation

rate among males aged 25 to 54 fell slightly

more than it had before, and there was a slight

decline rather than a slight increase in labor

force participation among women in the central age range. In contrast, workers 55 and

older increased their participation in the labor force significantly during the most recent

period of weak labor market conditions.

For more information on recent trends in

labor force participation, contact Steven

Hipple, Office of Employment and Unemployment Statistics, Bureau of Labor Statistics, Washington, DC 20212. Telephone: (202)

691-6378. E-mail: Hipple_S@bls.gov. Information in this report will be made available

to sensory impaired individuals upon request.

Voice phone: (202)-691-5200. Federal Relay

Service: 1-800-877-8339. This report is in

the public domain and may be reproduced

without permission.

 1991 2001 Age and sex Percent distribution

 1991 2001

SOURCE: Current Population Survey, March Annual Demographic

Survey.

NOTE: Estimates for 2001 are not directly comparable with those for

Number

1991 because data for 2001 are based on Census 2000 population

controls, whereas the 1991 data are based on 1990 census

population controls.

Total, aged 16 and older ................. 56,038 64,520 100.0 100.0

16 to 24 years .............................. 7,838 10,670 14.0 16.5

25 to 54 years .............................. 14,510 17,070 25.9 26.5

55 years and older ....................... 33,690 36,780 60.1 57.0

Total, aged 16 to 24 years ............... 7,838 10,670 100.0 100.0

III or disabled ............................... 231 408 2.9 3.8

Retired .......................................... 10 59 .1 .6

Home responsibilites .................... 1,231 1,406 15.7 13.2

Going to school ............................ 5,838 8,267 74.5 77.5

Could not find work ...................... 197 165 2.5 1.5

Other ............................................ 332 369 4.2 3.5

Men, aged 25 to 54 ........................ 3,149 4,634 100.0 100.0

III or disabled ............................... 1,874 2,776 59.5 59.9

Retired .......................................... 184 468 5.8 10.1

Home responsibilites .................... 146 409 4.6 8.8

Going to school ............................ 348 483 11.1 10.4

Could not find work ...................... 331 133 10.5 2.9

Other ............................................ 266 365 8.4 7.9

Women, aged 25 to 54 ................... 11,360 12,430 100.0 100.0

III or disabled ............................... 1,434 2,727 12.6 21.9

Retired .......................................... 148 563 1.3 4.5

Home responsibilites .................... 8,775 8,241 77.2 66.3

Going to school ............................ 523 603 4.6 4.9

Could not find work ...................... 213 74 1.9 .6

Other ............................................ 270 222 2.4 1.8

Total, aged 55 and older ................. 33,690 36,780 100.0 100.0

III or disabled ............................... 4,682 4,984 13.9 13.6

Retired .......................................... 21,640 29,180 64.2 79.3

Home responsibilites .................... 6,837 2,391 20.3 6.5

Going to school ............................ 54 57 .2 .2

Could not find work ...................... 95 19 .3 .1

Other ............................................ 373 145 1.1 .4