Civilian Labor Force: What It Is and How It Works

What Is the Civilian Labor Force?

Civilian labor force is a term used by the Bureau of Labor Statistics (BLS) to categorize the portion of the working-age U.S. civilian population that is either employed or available for employment. That is, they are currently working or available for work.

Military personnel, federal government employees, retirees, the handicapped, discouraged workers, and agricultural workers are not counted as part of the civilian labor force.

The omission of discouraged workers from the official government count is controversial.

Understanding the Civilian Labor Force

According to the BLS, the civilian labor force is made up of two components:

1. Civilian workers: This category includes all private sector, state, and local government workers. Workers—or "employed persons" in the language of the Current Population Survey—are defined as people 16 years old or older who did at least one hour of paid work (or unpaid work in their own business) in the survey's reference week, or who did at least 15 hours of unpaid work in a family business. Active-duty military personnel, institutionalized individuals, agricultural workers, and federal government employees are excluded.
2. Unemployed people: An unemployed person must have been available for work during the survey's reference week (discounting temporary illness) and made "specific efforts" to find a job during the previous four weeks.

Thus, people who would like to work but have given up looking due to a lack of opportunities, an injury, or illness are not counted as part of the civilian labor force.

Unemployment Rate and Participation Rate

The unemployment rate published by the government is defined as the unemployed population divided by the civilian labor force.

However, the government's definition of the labor force is at odds with colloquial usage and could be seen as understating the true unemployment rate. It does not count people who have given up looking for work or are handicapped.

Alternate Measures of Unemployment

The standard unemployment rate published by the BLS is the U-3. The Bureau releases other indicators of joblessness, the most comprehensive being the U-6 rate, which some economists consider the "real" unemployment rate.

The U-6 rate includes people who are employed part-time but would prefer full-time work as well as discouraged and "marginally attached" workers who have looked for a job within the past 12 months but not in the past four weeks.

The BLS also calculates the civilian labor force as a share of the entire civilian population. That includes everyone age 16 or older who is not institutionalized or on active duty. This measure, called the civilian labor force participation rate, rose consistently from 58.6% at the beginning of 1965 to a peak of 67.3% at the beginning of 2000. It fell steadily from that point, with a particularly notable drop recorded at the beginning of 2020—the period when lockdown measures were introduced to tackle the COVID-19 outbreak.

Since then, the rate has been steadily rising. The labor force participation rate for people ages 25 to 54 rose to 62.2% in May 2023, the highest level since January 2007.

The Baby Boomer Effect

An increase in the rate of retirement has a negative effect on labor force participation rates. In recent years, the baby boomer generation, which fueled America's productivity during much of the 1970s and 1980s, has begun retiring, causing a drop in the labor force participation rate.

Recessions and the automation of jobs also adversely impact the labor force participation rate.

The Bottom Line

The civilian labor force, which is tracked by the U.S. Department of Labor, counts only people who are employed or are unemployed but actively seeking work and are not military or federal personnel.

This number omits people who are unemployed but have not sought work recently. As a result, the most commonly reported national unemployment rate, which uses the civilian labor force number, is seek as underreporting the real numbers of people who need and want jobs.

If you want a fuller picture of the employment situation, look for the Bureau of Labor Statistics U-6 report, not the U-3 report that makes the news.