EBRI Issue Brief
Labor Force Participation and the Pandemic: Making Sense of the Changes
This Issue Brief examines the U.S. civilian labor force through December 2020, using data from the U.S. Census Bureau’s Current Population Survey, available through the Bureau of Labor Statistics. First, it investigates the trends in labor force participation rates of those ages 55 or older by age and gender. It also explores labor force trends for those ages 16 or older. Along with the labor force participation rates, the age and gender composition of the labor force and the adult population are investigated, allowing for the identification of key labor force and population trends. Finally, there is an analysis of how the labor force and employment changed in 2020 — during the pandemic — for individuals of various ages, genders, and races and ethnicities. Key findings include:
Changes in older workers in the labor force:
- The labor force participation (LFP) rate of U.S. civilians ages 55 or older increased sharply from 1991 to 2012 before falling and then rising again through 2019. For those ages 25–54, LFP rates have been steady to slightly declining since 1991. For those ages 24 or younger, LFP rates declined from 1990 to 2010, then leveled off thereafter.
- The portion of the total labor force ages 55 or older has continued to increase post-2007; however, the uptick has been primarily attributable to the continued aging of the Baby Boom generation and not to an increasing percentage of older workers remaining in the labor force.
- From the employer perspective, the increase in the share of individuals ages 55 or older in the labor force means that employers have been, and will continue to be, challenged to provide benefits that meet the needs of older workers while still meeting the needs of the growing share of younger workers.
Gender differences have narrowed but generally remain:
- The percentage of the population represented by women decreased by about 1 percentage point between 1975 and 2020. Conversely, the share of the those in the population who were male increased by about 1 percentage point over that same time period.
- From 1975–1999, the female share of the labor force increased by 6.1 percentage points. However, from 2000–2020, the female share of the labor force held relatively steady, reaching 47.2 percent in 2020. There was a corresponding decrease in the percentage of those in the labor force who were male.
Females’ increased share in the labor force occurred across all ages, but it was still lower than the male share. Labor force participation of the youngest workers (ages 16–24) did reach near equilibrium between the genders.
After some improvements, certain cohorts’ labor force participation rates decreased during the pandemic:
- Starting from 2000, the labor force participation rates of those 16 or older were generally declining for each race/ethnicity cohort examined before they increased between 2013 or 2014 and 2019. However, during the pandemic in 2020, each significantly dropped.
- The labor force participation rate of Hispanic Americans was the highest in each year, while the Black Americans’ rate was the lowest. However, the gap in LFP rates between Black and White Americans had nearly closed by 2019 before widening again in 2020. Black Americans experienced the largest decline in their LFP rate in 2020.
- Males of each race/ethnicity had higher labor force participation rates than females. However, male LFP rates trended downward from 2000–2019, before the big drop in 2020.
- The LFP rate trends for females were much flatter than for males, and LFP even increased for Hispanic American females through 2019. Further, until 2018, the order of the labor force participation rates for females was the reverse of the order for males, as Black American females had the highest rate among females in each year, then White American females, and then Hispanic American females. In 2018, the Hispanic American female rate moved above that of the White American female rate.
Certain groups were hit harder than others:
- The labor forced participation rates and the percentage of employed U.S. civilians decreased in 2020 across all genders, ages, and races/ethnicities.
- Still, Black Americans stood out as being particularly hard hit during 2020: Black American males and females had the largest percentage decline in the number employed from 2019 to 2020.
- Female Hispanic Americans had a similarly large percentage decline in their LFP rate compared with that of female Black Americans.
- While the decline in the number of employed males was slightly larger than that of females, the percentage reduction in the number employed was larger for females.
- Overall, the age/gender distribution of the labor force was nearly identical between 2019 and 2020. There were only two changes of more 0.1 percentage points in this distribution: for females ages 25–34 and males ages 35–44.
- The age/gender distribution of those employed showed more changes than the labor force, but the changes were still modest: Those ages 55 or older and females were most negatively impacted.
Implications for the future:
- The share of the labor force that is ages 55 or older will continue to grow in the short term because of the size of the Baby Boom generation, but it will begin to shrink as the next generation of workers continues to move into this age group.
- The share of the labor force represented by workers ages 35–44, which began increasing after 2017, will continue to increase — likely more quickly — as the Baby Boom generation workers leave the labor force and more Millennials become these ages.
- Many employers are likely to be faced with a bimodal labor force distribution across ages — larger numbers of both older and younger workers with fewer numbers of workers at ages in between. This presents different (and possibly incompatible) compensation and benefit challenges.
The pandemic did not alter the overall relative trends between the gender and age of American workers through the end of 2020. However, the pandemic could cause disruptions in these trends as workers decide how and if they wish to return to the office.