The numbers for the month of March are clear: in the United States, unemployment is declining and employment is increasing. However, this rebound in the labor market is accompanied by another trend: Americans are less likely to be working or looking for a job, as reported by the Wall Street Journal. In March 2026, the share of the working-age population that is either employed or seeking employment (Editor’s note: the labor force participation rate, for economists) has dropped to 61.9%. This has not been seen since 1977, excluding periods of pandemic.
This indicator is important because it helps measure a part of the economic growth potential. In short, the economy progresses either because more people are working or because each worker is producing more. A lower labor force participation rate means slower long-term economic growth,” summarized economist Gus Faucher in the American media.
Context: The article discusses the decrease in labor force participation in the United States and its potential impact on economic growth.
Aging Population and Decrease in Immigration
Since the 2000s, this indicator has been gradually decreasing. The aging population is believed to be the main reason for this. The baby boomer generation started retiring at the beginning of the century, which has a lasting impact on the activity rate. Moreover, early retirements among workers aged 55 and above have contributed to this trend. The pandemic has led many of them to leave the workforce before the age of 65, and this trend seems to continue. Some may have chosen to retire due to difficulties in finding a new job after losing one, disruptions caused by the rise of artificial intelligence, or thanks to the capital accumulated in their homes or retirement savings.
In this age group, the labor force participation rate has dropped from 40.2% in January 2020 to 37.2% in March 2026, its lowest level in over two decades.
Another factor contributing to the decline in this index is the stricter immigration policy of Donald Trump. The decrease in immigration and increase in expulsions have affected groups of young people who often come to the United States to work, thus contributing to the aging of the active population. Such a situation may have consequences for the American economy, which could face labor shortages in certain sectors.
Fact Check: The article mentions how immigration policies and aging population are affecting labor force participation in the United States.
Some Encouraging Signs
However, not everything is negative. For several years, productivity has seen above-average growth. A positive development according to Greg Daco: “this has largely offset the slowdown in the growth of the active population,” details the chief economist of EY-Parthenon, a consultancy specializing in transformative strategy and transactions. Nonetheless, he qualifies this observation: the question of productivity gains in the coming years remains open.
Another encouraging sign: the labor force participation rate of 25-54 year-olds remains near its highest levels in several decades. According to economists cited by the Wall Street Journal, this suggests that the overall decline in participation is more related to the aging of the population and immigration policy than to a general discouragement towards the labor market.
