Our Labor Force Recovery is better than after the Great Recession

The workforce is recovering steadily since the pandemic, data from the Bureau of Labor Statistics demonstrates.

The coronavirus pandemic sent shockwaves through the workforce, pushing many into unemployment and some out of the workforce entirely as they either retired or stopped looking for work out of frustration. From February 2020 to April 2020, the labor force participation rate fell a full 3.2 percentage points.

Labor Force Participation Rate 2019-2021

The “labor force participation rate” (LFPR) refers to all the people of employment age who are either actively working or actively searching for a job, and so differs from the employment rate by itself. It’s critical to understand the LFPR because it is more closely tied to the long-term structural health of the economy than the ever-shifting employment numbers.

The LFPR is a “sticky” metric – historically this number has never been quick to return to previous norms. But as of November 2021, the LFPR has climbed back by 1.6 percentage points, signifying 5.6 million people re-entering the workforce.

Though the pandemic’s impact on the labor force was sudden, it isn’t the worst hit to the LFPR we’ve seen in recent memory. The 2008 recession resulted in a slow and steady drop in the labor force participation rate of 3.6 percentage points over seven years, hitting its lowest point in 2015. The LFPR began a sluggish recovery and had improved by a percentage point by the end of 2019 before the pandemic hit.

Labor Force Participation Rate 2006-2021

The pandemic pushed many people out of the labor force, but if things stay on trend, CONTI analysts believe the U.S. will continue to see a faster return to pre-pandemic levels than we did following the Great Recession.