Labor Force Participation Rate

The labor force participation rate measures the percentage of the non-institutionalized, working-age civilian population that is currently in the labor force (meaning they either have a job or are looking for work). Working-age refers to anyone 16 years of age or older, while non-institutionalized civilians refer to anyone who is not incarcerated, in a mental facility, or actively serving in the armed forces. Essentially, the labor force participation rate measures, out of all of the people who are currently able to work, the percentage of people who are either working or looking for work.

Labor force participation rate is an important indicator of an economy’s health, with a higher participation rate usually being a sign of a healthier economy. More people participating in the labor force generally means more people supporting those who are unable to work, whether because of age or disability status. Labor force participation also has fiscal implications for governments at every level. As more people are engaged in the labor force, this means more people to pay taxes—referred to as broadening the tax base. Conversely, fewer people in the labor force means fewer people paying taxes, which requires governments to either raise taxes to maintain spending levels or make funding cuts, hurting many of the core services upon which we all rely.

Labor force participation has been declining in both Oklahoma and the country as a whole since the turn of the century. Much of this decline has been due to our aging population, while other recent contributing factors are child care responsibilities and COVID-related disabilities. Workforce investments like expanding access to child care, increasing the value of the Earned Income Tax Credit, and creating a paid family and medical leave program can strengthen labor participation rates and reverse declining state trends.