Participation Rate

Can’t find a job, but haven’t given up hope yet? Well, you still get a participation ribbon.

All people who are of working age who either a) have a job, or b) are looking for a job, are factored into the participation rate. Add up all the job-haves and job-hopefuls, and divide that by the entire working age population to get the participation rate.

Participation implies that you’re participating in the economy. Retired people aren’t counted. Neither are people who are of working age, but have given up on the job search. Students, incarcerated people, and homemakers also aren’t included. Sorry, stay-at-home moms who are working their butts off.

Remember, though: we can’t expect the participation rate to stay stable. For instance, as boomers are retiring en masse, we might see the participation rate shrink, just because a large group of people are leaving the active labor force.

On the flip-side, it’s important to look at the unemployment rate along with the participation rate. The economy can be a bull market, growing, but with a high unemployment rate if people can’t find work.