The labor force includes people who are working or actively looking for work. It contains two groups: those who are employed and those who are unemployed but searching for a job. Anyone not looking for work is outside the labor force. That includes retirees, full time students who are not job hunting, stay at home parents, or people who are not seeking employment for any reason.
Understanding the labor force helps measure economic activity and track job trends. It shows how many people are available and willing to work, which is key for evaluating the strength of the economy.
What is the difference between the labor force and the workforce?
These two terms sound similar but they describe different groups. The labor force includes everyone who is working or actively job searching. The workforce refers only to people who are currently employed.
Group | Who is included |
Labor Force | Employed people plus unemployed people who are job hunting |
Workforce | Only those who are employed |
If a country has 10 million employed workers and 2 million unemployed people who are looking for work, the labor force is 12 million. The workforce is 10 million. This distinction matters because it helps economists understand job trends, identify gaps, and shape employment policies.
How is the labor force measured?
Government agencies collect data to measure the labor force. In the United States, the Bureau of Labor Statistics uses the Current Population Survey to track employment status, job search activity, demographics, and more. Two important metrics come from this data.
Labor force participation rate
This rate shows the share of the working age population that is either employed or looking for work. It is calculated by dividing the labor force by the total working age population and multiplying by 100.
Unemployment rate
This rate measures the percentage of people in the labor force who are unemployed and actively searching for a job. It helps determine how easy or difficult it is for people to find work.
These metrics give insight into economic conditions and help guide decisions on job growth, wages, and policy changes.
What is an example of a labor force?
Consider the United States. If about 160 million people are working or actively looking for work, the national labor force is 160 million.
Here is a smaller example. In a town with 50,000 working age residents:
35,000 are employed
5,000 are actively seeking work
The labor force in that town would be 40,000. This kind of data helps businesses, policymakers, and economists plan hiring, forecast growth, and build economic strategies.
Key Takeaways
Summary | |
Definition | The labor force includes people who are working or actively seeking work. |
Difference | The workforce includes only employed people. The labor force includes employed and job seekers. |
Measurement | The BLS tracks participation and unemployment rates to measure the labor force. |
Importance | Helps explain economic trends, job availability, and workforce engagement. |
FAQs
Who is not counted in the labor force?
People not searching for work, such as retirees, nonworking students, and stay at home caregivers.
Does part time work count in the labor force?
Yes. Anyone who works even part time is counted as employed in the labor force.
Can the labor force shrink?
Yes. It can shrink when people stop looking for work or when the population ages.
