A frequent question is: "I've heard the participation rate for older workers is increasing, yet you say one of the reasons the overall participation rate has fallen is because people are retiring. Is this a contradiction?"



Answer: This isn't a contradiction. When we talk about an increasing participation rate for older workers, we are referring to people in a certain age group. As an example, for people in the "60 to 64" age group, the participation rate has increased over the last ten years from 51.1% in April 2004 to 55.7% in April 2014 (see table at bottom for changes in all 5 year age groups over the last 10 years).



However, when we talk about the overall participation rate, we also need to know how many people are in a particular age group at a given time. As an example, currently there is a large cohort that has recently moved into the "60 to 69" age group. To calculate the overall participation rate we need to multiple the participation rate for each age group by the number of people in the age group.





Click on graph for larger image.



This graph shows the population in each 5 year age group in April 2004 (blue) and April 2014 (red). Note: Not Seasonally Adjusted, Source: BLS.



In April 2004, the two largest groups were in the "40 to 44" and "45 to 49" age groups. These people are now the 50 to 59 age group.



In April 2004, there were also a large number of people in the 50 to 59 age group. These people are now 60 to 69.



The following table summarizes what has happened if we follow these two cohorts (40 to 49 in April 2004, and 50 to 59 and April 2004).





Cohort 11 Apr-04 Apr-14 Population 44,508 43,455 Participation Rate 83.8% 74.9% Labor Force 37,294 32,535 Cohort 22 Apr-04 Apr-14 Population 35,373 33,322 Participation Rate 76.1% 45.2% Labor Force 26,915 15,065 1Cohort 1: People aged 40 to 49 in April 2004.

2Cohort 2: People aged 50 to 59 in April 2004.

Populaton and Labor Force by Age Group (000s) NSA Apr-04 Apr-14 16 to 19 Age Group Population 16,198 16,652 Participation Rate 40.7% 31.1% Labor Force 6,600 5,174 20 to 24 Age Group Population 20,173 22,107 Participation Rate 74.2% 69.2% Labor Force 14,970 15,287 25 to 29 Age Group Population 18,886 21,151 Participation Rate 81.4% 79.8% Labor Force 15,383 16,871 30 to 34 Age Group Population 20,027 20,877 Participation Rate 83.4% 81.4% Labor Force 16,712 17,001 35 to 39 Age Group Population 20,595 19,332 Participation Rate 83.3% 81.9% Labor Force 17,151 15,841 40 to 44 Age Grou[ Population 22,683 20,232 Participation Rate 83.9% 82.6% Labor Force 19,026 16,701 45 to 49 Age Group Population 21,825 20,554 Participation Rate 83.7% 81.4% Labor Force 18,268 16,737 50 to 54 Age Group Population 19,247 22,306 Participation Rate 80.4% 78.1% Labor Force 15,480 17,416 55 to 59 Age Group Population 16,126 21,149 Participation Rate 70.9% 71.5% Labor Force 11,435 15,119 60 to 64 Age Group Population 12,499 18,441 Participation Rate 51.1% 55.7% Labor Force 6,384 10,273 65 to 69 Age Group Population 9,716 14,881 Participation Rate 26.6% 32.2% Labor Force 2,585 4,792 70 to 74 Age Group Population 8,349 10,915 Participation Rate 15.3% 19.0% Labor Force 1,280 2,070 75 and older Population 16,434 18,841 Participation Rate 6.0% 8.3% Labor Force 986 1,563 Total Population 222,758 247,438 Participation Rate 65.7% 62.6% Labor Force 146,260 154,845

So even though the participation rate for an age group is increasing, the participation rate for a cohort decreases as it moves into an older age group. This shows we need to follow 1) the trend for each age group, and 2) the number of people in each age group.Note in the table below that the participation rate has been falling sharply for younger age groups (staying in school - a positive for the future) - and that the population is increasing for those age groups. This is another key trend that has been pushing down the overall participation rate.This table is population, labor force and participation rate by age group for April 2004 and April 2014.