How to Calculate the Labor Force
The labor force equals everyone employed plus everyone unemployed who is actively seeking work: Labor force = Employed + Unemployed.
The Labor Force formula
Calculator
Enter the population, the employed, and the unemployed to get the labor force, the unemployment rate, and participation.
Employed plus unemployed people who are actively looking.
- Not in labor force
- 100
- Unemployment rate
- 4%
- Participation rate
- 60%
Students, retirees, discouraged workers, and anyone not looking.
Unemployed divided by the labor force, not by the population.
Labor force divided by the civilian noninstitutional population.
How to calculate Labor Force, step by step
- 1Start from the civilian noninstitutional population. This is the population base: age 16 and over, not on active military duty, and not living in a prison, nursing home, or psychiatric hospital.
- 2Split that population into three groups. Employed (worked for pay or profit), unemployed (did not work but looked for a job in the last four weeks), and not in the labor force (everyone else in the base population).
- 3Add employed and unemployed. Labor force = Employed + Unemployed. People who are not in the labor force are left out of this sum entirely.
- 4Use the labor force as the denominator or numerator you need. Unemployment rate = Unemployed ÷ Labor force. Labor force participation rate = Labor force ÷ Civilian noninstitutional population.
Worked example: Labor Force
A country's civilian noninstitutional population is 250 million. Of these, 144 million are employed and 6 million are unemployed and actively looking for work. Labor force = 144 + 6 = 150 million. The remaining 250 − 150 = 100 million are not in the labor force. Unemployment rate = 6 ÷ 150 = 4%. Labor force participation rate = 150 ÷ 250 = 60%.
Why the labor force is not just population minus children
The civilian noninstitutional population already removes people under 16, active-duty military, and people in institutions, so it looks like a clean base to work from. Splitting it into labor force and not in labor force is a separate cut, and it depends on behavior, not on any fixed trait, so it moves every month.
A person can cross that line without any change in their skills or their willingness to work. Someone unemployed who stops sending out applications because they believe nothing is available becomes a discouraged worker and drops out of the labor force, even though their situation has not improved. Someone not in the labor force who starts a job search after a partner is laid off enters the labor force as unemployed, then becomes employed once they find work.
That is why the labor force, the unemployment rate, and the participation rate have to be read together. A falling unemployment rate driven by people finding jobs is good news; a falling unemployment rate driven by people leaving the labor force is not the same thing, even though the arithmetic looks identical from the unemployment rate alone.
Labor Force questions
Who is excluded from the labor force?
Anyone under 16, on active military duty, or living in an institution such as a prison or nursing home is excluded from the population base entirely. Within the remaining civilian adult population, anyone who is not working and not actively looking for work is not in the labor force, including retirees, full-time students who are not job-hunting, people staying home to care for family, and discouraged workers who have given up looking.
Are discouraged workers counted as unemployed?
No. A discouraged worker wants a job but has stopped actively searching, usually after concluding no suitable work is available, so the household survey classifies them as not in the labor force rather than unemployed. This is why the official unemployment rate can understate how many people would take a job if one appeared.
How does the labor force feed into the unemployment rate and the participation rate?
The labor force is the denominator of the unemployment rate (Unemployed ÷ Labor force) and the numerator of the labor force participation rate (Labor force ÷ Civilian noninstitutional population). A shrinking labor force, for example if discouraged workers stop searching, can lower the unemployment rate and the participation rate at the same time even though nobody found a job.
Is a full-time student part of the labor force?
Only if they are working or actively seeking work. A student with a part-time job is employed and counts in the labor force; a student who is not working and not looking for work is not in the labor force, regardless of how many hours they spend in class.
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