We all know that, for many of us, Covid changed our willingness to work.
Now a new paper tells us how.
Labor Force Participation
At 62.4 percent, the U.S. labor force participation rate tells us who could be working but is not..It lets us know how much of the population we can depend on to produce the incomes and goods and services in our GDP.
It does not. though. tell us how long we work.
Using a NY Federal Reserve survey, researchers found that desired hours of work dropped by much more than the participation rate during the height of the pandemic. Fewer desired work hours created a tighter labor supply.
Furthermore, the researchers used data about the drop in hours to debunk the theory that women with childcare obligations were a main source of labor force contraction. Instead, the intent to work fewer hours was found among most demographic groups. Asked why, we named a slew of reasons. They included obligations at home, preference for work-from-home, government checks and more household wealth that facilitated fewer work hours. We also might have feared the virus and found commuting unpleasant. The one qualification? The reduction was somewhat larger among workers without a college degree.
Perhaps confirming the changes were Covid related, the August participation rate crept upwards as workers returned to the office.
Our Bottom Line: Participation Rate
The participation rate compares who could be in the labor force to who is in it. Quantified, the participation rate is a fraction. As members of the labor force, the people that are 16 and over, employed or looking for a job compose the numerator. Then the denominator is the entire noninstitutionalized population (shown below). As a percent, the result is the participation rate.
The BLS gave us a pretty good diagram of the noninstitutionalized population in and out of the labor force:
We cannot tell though, how many labor hours the diagram represents.
My sources and more: Thanks to Greg Ip at WSJ for alerting me to the new NBER paper on work hours. I did though need to refer to the BLS definitions pages.