Labor Force: What It Means for Employers

What it means in practice

The official definition. The Bureau of Labor Statistics (BLS) builds the labor force from a base group, the civilian noninstitutional population age 16 and older. That base leaves out people on active duty in the Armed Forces and people living in institutions such as correctional facilities and residential nursing or mental health care facilities. There is no upper age limit. Everyone in the base population is sorted into exactly one of three groups: employed, unemployed or not in the labor force. The BLS concepts and definitions page states that the labor force includes all people age 16 and older who are classified as either employed or unemployed. The rest are not in the labor force.

Who counts as employed. A person is employed if, during the survey reference week, he or she did any work at all for pay or profit (as little as one hour), worked in his or her own business, worked 15 or more hours without pay in a family business, or had a job but was temporarily absent for the entire week because of vacation, illness, bad weather, a labor dispute or a similar reason. The reference week is usually the Sunday-through-Saturday week that includes the 12th of the month. Each employed person is counted only once, even with two or more jobs, and is classified by the job where he or she usually works the most hours.

Who counts as unemployed. A person is unemployed if he or she had no job during the reference week, was available for work, and made at least one specific, active effort to find a job during the 4 weeks ending with the reference week. Active methods include contacting an employer directly or interviewing, using a public or private employment agency, asking friends or relatives, submitting resumes or applications, answering or placing ads, and checking union or professional registers. Passive methods, such as only reading online postings or attending a training course, do not count. One exception: workers on temporary layoff who have been given a date to return or expect to return within 6 months are counted as unemployed even if they are not looking.

Not in the labor force, marginally attached and discouraged. People not in the labor force were neither employed nor actively looking in the prior 4 weeks. BLS lists common reasons such as family responsibilities, being in school or training, ill health or disability and childcare problems. Within this group, the marginally attached are people who want a job, are available, and looked for work sometime in the past 12 months but not in the most recent 4 weeks. Discouraged workers are a subset of the marginally attached who give a job-market related reason for not currently looking. None of these people are counted as unemployed in the official rate. In September 2026, 5.8 million people not in the labor force said they currently wanted a job, 1.5 million were marginally attached and 414,000 were discouraged workers (BLS, The Employment Situation).

The core rates. BLS publishes three rates from these counts. The labor force participation rate is the labor force as a percent of the civilian noninstitutional population. The unemployment rate is the number unemployed as a percent of the labor force, not of the whole population. The employment-population ratio is the number employed as a percent of the civilian noninstitutional population. Because the denominators differ, the unemployment rate can fall while the participation rate also falls, for example when people stop looking and leave the labor force.

Example 1: computing the national rates. The Employment Situation Table A-1 for September 2026 shows, seasonally adjusted and in thousands, a civilian noninstitutional population of 275,554, a civilian labor force of 170,262, employment of 163,152 and unemployment of 7,109. The participation rate is 170,262 / 275,554 = 61.79 percent, which rounds to the published 61.8. The unemployment rate is 7,109 / 170,262 = 4.18 percent, published as 4.2. The employment-population ratio is 163,152 / 275,554 = 59.21 percent, published as 59.2. Employed plus unemployed equals 170,261, one thousand short of the labor force total because each figure is rounded separately. Subtracting the labor force from the population leaves 105,292 thousand people not in the labor force, matching the table.

The alternative measures, U-1 to U-6. BLS Table A-15 publishes six measures of labor underutilization. U-1 is people unemployed 15 weeks or longer, and U-2 is job losers and people who completed temporary jobs, each as a percent of the labor force. U-3 is total unemployed as a percent of the labor force, the official rate. U-4 adds discouraged workers to both the count and the labor force. U-5 adds all marginally attached workers. U-6 adds people employed part time for economic reasons, meaning those who worked 1 to 34 hours because of slack work, business conditions or inability to find full-time work. For September 2026 the seasonally adjusted measures were 1.8, 1.9, 4.2, 4.4, 5.0 and 7.6 percent, compared with 1.8, 2.1, 4.4, 4.7, 5.4 and 8.1 percent in September 2025.

Example 2: checking U-4 and U-6 by hand. Using the September 2026 counts, U-4 is (7,109 + 414) / (170,262 + 414) = 7,523 / 170,676 = 4.41 percent, in line with the published 4.4. For a rough U-6, add the 1.5 million marginally attached and the 4.5 million employed part time for economic reasons from the release text: (7.1 + 1.5 + 4.5) / (170.3 + 1.5) = 13.1 / 171.8 = about 7.6 percent. BLS computes the published figure from its own detailed series, so a hand calculation with rounded components only approximates it.

How the survey is collected. The figures come from the Current Population Survey (CPS), a monthly household survey that the U.S. Census Bureau has run since 1942. BLS's How the Government Measures Unemployment explains that Census Bureau employees contact about 60,000 eligible households, approximately 110,000 individuals, through live interviews in person or by phone. A household is interviewed for 4 consecutive months, leaves the sample for 8 months and returns for 4 more, so about 75 percent of the sample is the same from one month to the next. BLS uses a sample because counting every unemployed person each month would cost too much and take too long. It also does not use unemployment insurance claims, because claims leave out groups such as the self-employed and people who never applied or exhausted benefits; on average only about one-third of the unemployed received regular UI benefits.

Household survey versus payroll survey. The same monthly release also reports the establishment survey, which covers about 119,000 businesses and government agencies representing about 622,000 worksites. The two measure different things, according to the Employment Situation technical note. The household survey counts people, includes the unincorporated self-employed and is limited to age 16 and older; the payroll survey counts jobs, so a person with two jobs is counted twice, and it has no age limit. Monthly changes need context: the technical note puts the 90 percent confidence interval for the monthly change in the unemployment rate at about plus or minus 0.3 percentage point.

Characteristics by age, sex and race. BLS annual averages show large differences by group. In 2025, participation was 67.8 percent for men and 57.3 percent for women, 36.2 percent for teens 16 to 19, 83.6 percent for people 25 to 54 and 19.1 percent for people 65 and older (CPS Table 3). The 2025 unemployment rate was 14.0 percent for teens 16 to 19 and 3.6 percent for those 25 to 54. By race and ethnicity, 2025 participation was 62.0 percent for White, 62.5 percent for Black and 65.5 percent for Asian workers (CPS Table 5) and 67.1 percent for Hispanic or Latino workers (CPS Table 6), with unemployment rates of 3.8, 6.9, 3.6 and 5.1 percent. BLS notes that 2025 annual averages are based on 11 months because October 2025 data were not collected during the federal government shutdown, so they are not strictly comparable with other years. BLS also publishes a fuller annual report, the most recent edition being Labor Force Characteristics by Race and Ethnicity, 2023 (Report 1113, December 2024).

Where the labor force is headed. BLS's Employment Projections program, whose 2025-2035 release came out August 27, 2026, projects the civilian labor force to reach 176.3 million in 2035, up from 170.8 million in 2025 (Table 3.1). That is 3.2 percent growth, or 0.3 percent a year, compared with 0.8 percent a year from 2015 to 2025. The labor force age 16 to 24 is projected to shrink 9.2 percent, while the labor force 75 and older is projected to grow 68.0 percent, from 2.2 million to 3.7 million. In Table 3.3, overall participation falls from 62.4 to 61.1 percent, while participation rises from 66.6 to 69.5 percent for ages 55 to 64, from 26.7 to 29.1 percent for ages 65 to 74 and from 8.5 to 10.1 percent for ages 75 and older. For employers, the older age bands are mostly Baby Boomers, and the youngest entrants are Generation Z.

Where states differ. State and local labor force figures come from the BLS Local Area Unemployment Statistics (LAUS) program, which produces monthly and annual labor force, employment and unemployment data for states, counties, metro areas and many cities by place of residence. The LAUS methodology says state estimates come from models that use CPS data as the main input, with payroll employment and UI claims counts from state workforce agencies to reduce volatility, and are controlled to national totals. The state release of October 20, 2026 reported September 2026 rates ranging from 2.0 percent in South Dakota to 5.6 percent in the District of Columbia, with California (5.1) and Michigan (5.0) significantly above the U.S. rate and 20 states significantly below it. As an example of a state page, the Texas Workforce Commission's October 16, 2026 release reported a Texas civilian labor force of 15,948,400 and a seasonally adjusted unemployment rate of 4.4 percent for September 2026, and says its estimates are produced in cooperation with BLS.

Example 3: a local labor market. The same Texas release lists, not seasonally adjusted and in thousands, a September 2026 labor force of 1,572.0 and unemployment of 57.4 for the Austin-Round Rock-San Marcos metro area. The unemployment rate is 57.4 / 1,572.0 = 3.65 percent, which the release shows as 3.7. An employer comparing that figure with the Texas statewide 4.4 percent should note that one is not seasonally adjusted and the other is.

Labor force versus labor market. The labor force is a count of people, the supply side. The labor market is the broader system in which that supply meets employer demand, including wages, hiring and job openings; BLS measures the demand side separately through the Job Openings and Labor Turnover Survey (JOLTS), which estimates job openings, hires and separations.

Labor force versus headcount and FTE. A company's headcount counts its own workers, and a full-time equivalent (FTE) count converts hours into full-time units. The CPS does neither: one hour of paid work in the reference week makes a person employed. Its hour lines are statistical too. The CPS treats workers who usually work 35 or more hours a week as full-time and fewer than 35 as part-time, while for Affordable Care Act employer shared responsibility purposes the IRS uses an average of 30 hours of service per week or 130 hours per month. See full-time hours and part-time hours.

FAQ: Is a retiree or a full-time student unemployed? No, unless he or she is available for work and actively looked for a job in the past 4 weeks. Otherwise the person is not in the labor force.

FAQ: How often are the national numbers published? Monthly, in The Employment Situation; the September 2026 report came out Friday, October 2, 2026. State figures follow in the LAUS state release later in the month.

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