America’s Labor Force Participation Rate Problem

It is common knowledge that U.S. employers are struggling to fill jobs. Current government data suggests there are 10 million jobs waiting to be filled but only 5.7 million unemployed workers. But before you assume that there are not enough capable bodies to fill the remaining 4 million jobs, you should probably consider what is known as the ‘labor force participation rate’.

Also known by the acronym CIVPART, the labor force participation rate has been hovering around 62% for the last couple of years. Back in February 2020, just before the COVID shutdowns began, the rate was 63.3%. It was as high as 67% in 1997.

Annual data from the BLS demonstrates that CIVPART has been steadily declining for the better part of 25 years. Like it or not, this is the primary reason behind the lack of available workers to fill open jobs. It is a problem inasmuch as it demonstrates that a large percentage of the American population simply isn’t willing to work.

More About CIVPART

The labor force participation rate is a representation of the number of people in the U.S. civilian population that could work but chooses not to. It obviously excludes those unable to work due to disability or institutionalization.

With that definition in hand, it is clear that less than three-fourths of those adults who can work are actually doing so. This is in addition to the previously mentioned 5.7 million workers classified as unemployed. These are workers who are actively looking for jobs but have not yet found positions they either qualify for or can afford to take.

What if we combined those unemployed workers with the rest of the labor force that has chosen not to participate? We would have more than enough people to get every job filled. So why are there still 10 million jobs still open?

Look to the Great Resignation

Are you familiar with the Great Resignation that began in August of 2020? BenefitMall, a Dallas general agency that specializes in employee benefits, has covered it extensively over the last 24 months. They attribute a good portion of it to unhappiness among employees no longer willing to accept the old ways of doing things.

BenefitMall says millions of employees either quit their jobs or refused to return to work in hopes of finding something better elsewhere. And it is not just better pay. Workers apparently want mental health benefits, more flexible schedules, more remote work opportunities, support with childcare, and a range of non-medical options including disability and life insurance.

Although the Great Resignation has been replaced by the Great Reshuffle – which is defined as people being ready to switch jobs as soon as a better opportunity comes along – the underlying motivations remain the same. A worker who feels like their employer is not taking care of business has no trouble going elsewhere.

The Skills Gap Problem

A secondary issue is the ongoing skills gap. Companies in need of skilled workers cannot find them because they do not exist. However, this is a problem created by employers themselves. They are in the best position to solve it. How do they do so? By hiring people who want to work, even if they don’t have college degrees and certifications, and then training them. It is costly but highly effective.

America’s employers are struggling to fill open positions. But look behind the curtain and you discover that what we have is a labor force participation rate problem. There are millions of people who could work but don’t. Get them back into the labor pool and you solve the problem.