(The Wall Street Journal, Jeanne Whalen, April 8, 2026)
The U.S. labor market saw a rebound last month with healthy job growth and a drop in unemployment, but another trend has clearly emerged: the continued decline in the labor force participation rate, which fell to 61.9% in March, the lowest level since 1977 outside of the pandemic period.
The labor force participation rate, that is the share of the working-age population that is employed or seeking work, has been gradually declining since the early 2000s mainly due to the aging population, plummeted in the early months of the pandemic, bounced back and grew for a while before resuming its decline in 2024, and in recent months has been further pushed down by the aging population and the restrictive immigration policies of the Trump administration.
The decline in the participation rate matters because it helps determine the pace of economic growth, which happens either because more workers enter or because each worker produces more, and a lower rate means slower long-term economic growth, although productivity growth above the historical average in recent years has partly offset the slowdown in labor force growth.
Participation Rate at Historic Lows
“The labor force participation rate fell to 61.9% in March, its lowest level since 1977 outside of the pandemic. The rate has been gradually declining since the early 2000s, largely due to the aging population.”
Main Causes of the Decline
“The ongoing aging of the population and the Trump administration’s immigration crackdown have contributed to pushing the decline in recent months. The participation rate for Americans aged 55 and older fell from 40.2% in January 2020 to 37.2% last month, the lowest level in more than 20 years. Immigration policies have cut off a channel of often young residents who come to the country specifically to work.”
Consequences for Economic Growth
“A lower participation rate means slower long-term economic growth. Over time, a lower participation rate could create more problems for the U.S. economy because at some point we will also experience population declines. A smaller pool of potential workers, combined with lower participation rates within that pool, could lead to labor shortages in some areas.”
Positive Factor for Prime-Age Workers
“The participation rate of people between 25 and 54 years old has remained near multi-decade highs, evidence that the overall participation decline is more linked to population aging and the migration shock than to people struggling to find work and giving up.”
Role of Productivity
“Fortunately, U.S. productivity growth has been above historical averages for the past several years. This has essentially partially offset the slowdown in labor force growth. But there remains an open question about how much productivity growth we will get in the coming years.”
(Excerpt from the newsletter by Giuseppe Liturri)
