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The labor force is the actual number of people available for work. The labor force of a country includes both the employed and the unemployed. The labor force participation rate, LFPR (or economic activity rate, EAR), is the ratio between the labor force and the overall size of their cohort (national population of the same age range).
In the United States, the unemployment rate is estimated by a household survey called the Current Population Survey, conducted monthly by the federal Bureau of Labor Statistics. The unemployment rate is calculated by dividing the number of unemployed persons by the size of the workforce and multiplying that number by 100, where an unemployed person is defined as a person not currently employed but actively seeking work. The size of the workforce is defined as those employed plus those unemployed.
By BLS definitions, the labor force is the following: "Included are persons 16 years of age and older residing in the 50 States and the District of Columbia who are not inmates of institutions (for example, penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces."
The labor force participation rate is the ratio between the labor force and the overall size of their cohort (national population of the same age range). In the West during the later half of the 20th century, the labor force participation rate increased significantly, largely due to the increasing number of women entering the workplace.
Gender and the US labor force
In the United States, there were three significant stages of women’s increased participation in the labor force. During the late 19th century through the 1920s, very few women worked. Working women were often young single women who typically withdrew from labor force at marriage unless their family needed two incomes. These women worked primarily in the textile manufacturing industry or as domestic workers. This profession empowered women and allowed them to earn a living wage. At times, they were a financial help to their families.
Between 1930 and 1950, female labor force participation increased primarily due to the increased demand for office workers, women participating in the high school movement, and electrification which reduced the time spent on household chores. In the 1950s to the 1970s, most women were secondary earners working mainly as secretaries, teachers, nurses, and librarians (pink-collar jobs).
Claudia Goldin and others, specifically point out that by the mid-1970s there was a period of revolution of women in the labor force brought on by different factors. Women more accurately planned for their future in the work force, choosing more applicable majors in college that prepared them to enter and compete in the labor market. In the United States, the labor force participation rate rose from approximately 59% in 1948 to 66% in 2005, with participation among women rising from 32% to 59% and participation among men declining from 87% to 73%.
A common theory in modern economics claims that the rise of women participating in the US labor force in the late 1960s was due to the introduction of a new contraceptive technology, birth control pills, and the adjustment of age of majority laws. The use of birth control gave women the flexibility of opting to invest and advance their career while maintaining a relationship. By having control over the timing of their fertility, they were not running a risk of thwarting their career choices. However, only 40% of the population actually used the birth control pill. This implies that other factors may have contributed to women choosing to invest in advancing their careers.
Another factor that may have contributed to the trend was the The Equal Pay Act of 1963, which aimed at abolishing wage disparity based on sex. Such legislation diminished sexual discrimination and encouraged more women to enter the labor market by receiving fair remuneration to help raise children.
The labor force participation rate can decrease when the rate of growth of the population outweighs that of the employed and unemployed together. The labor force participation rate is a key component in long-term economic growth, almost as important as productivity.
The labor force participation rate explains how an increase in the unemployment rate can occur simultaneously with an increase in employment. If a large amount of new workers enter the labor force but only a small fraction become employed, then the increase in the number of unemployed workers can outpace the growth in employment.