Who Are the Missing American Workers?

Last year, we estimated that there were almost 8 million workers missing from the labor force. Because of job growth, that number is down slightly to 7.4 million.

With the exception of DC and MA, most states have not recovered their pre-recession Labor Force Participation Rates (LFPR).

Prime Age Workers (those aged 25 to 54) are within a hair's breadth of their pre-recession LFPRs, indicating that labor markets may start to tighten very soon. However, wage inflation may be muted for the time being. Why? There are huge pools of labor waiting to take up the slack, particularly in the 20-24 and teenage (16 to 19) age groups. Their LFPRs are still significantly below their pre-recession peaks. The oldest age bracket (55+) actually have a higher participation rates post-recession than pre-recession, indicating that many of them are not ready to retire and/or are working part-time jobs. All these factors serve to suppress wage inflation.

In terms of absolute numbers, there are at least 1.5 million young workers missing from the labor force, plus another 1.3 million older workers hanging on to the labor force.

It would take several more years of sustained job growth to reduce this labor slack.