Q:

How is the labor force participation rate calculated?

A:

The labor force participation rate is calculated by adding the number of the noninstitutionalized and nonactive military duty population between the ages of 16 and 64 who are employed or who are looking for work. The United States Department of Labor's Bureau of Labor Statistics (BLS) bases the labor force participation rate on Census Bureau population projections.

Noninstitutionalized is defined as those who are not in prison, mental institutions or homes for the aged. Employed is defined as anyone who worked at least an hour or who operated their own business or farm. It also includes those who have jobs but were absent for reasons including illness, maternity leave and other personal reasons even if they were not paid for time off or were looking for other work and unpaid family business workers. Unemployed is defined as those who are available and looking for work. To arrive at an unemployment number, the Census Bureau selects a sampling of approximately 600,000 households each month to represent the United States and contacts each one to gather employment information. That information is then submitted to the BLS, who calculates the labor force participation rate based on the number of people between ages 16 and 64 and the number of employed and unemployed persons.

Sources:

  1. bls.gov
  2. frbsf.org

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