Participation rates

Participation rates decline in 2005 for first time outside of recessionary period

• The participation rate measures the supply of labour (the employed and the unemployed combined) relative to the size of the working-age population. In other words, it is the share of the working-age population that is either working or looking for work.
• In 2005, about 17.3 million people were in the labour market. As a result of fewer people working and fewer people looking for work, the participation rate that year decreased 0.3 percentage points from 2004 to reach 67.2%. While the participation rate increased every year between 1996 and 2003, it held steady in 2004 and declined slightly in 2005.
• From 1976 to 1989, the participation rate followed an upward trend, peaking at 67.3% in 1989. As a result of labour market weakness in the first half of the 1990s, the participation rate then fell for seven consecutive years. This was a long decline compared with the single-year dip during the recession of the 1980s. In contrast, despite the fact that jobs were readily available in 2005, people took themselves out of the labour market, leading to a rapid tightening of labour market conditions. This is the first time the participation rate has declined outside of a recessionary period, most likely the result of ageing baby boomers and youths leaving the labour force.

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