"They were considered part of the work force if they were working, or looking for work
.Even when they were not part of the workforce (they didn't care to work, or were discouraged from looking for work), they effect the workforce participation rate, because they are counted in the population that the labor force is divided in to to get the work force participation rate." Read more: Participation Rate Definition | Investopedia investopedia.com
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A measure of the active portion of an economy's labor force. The participation rate refers to the number of people who are either employed or are actively looking for work. The number of people who are no longer actively searching for work would not be included in the participation rate. During an economic recession, many workers often get discouraged and stop looking for employment, as a result, the participation rate decreases.
Consider a report from the Bureau of Labor Statistics issued in November 2006, more than two years before Obama took office and before the start of the Great Recession. It pegged the start of the decline in participation rates at around 2000, and projected the decline would continue for the next four decades.
Bureau of Labor Statistics, November 2006: Every year after 2000, the rate declined gradually, from 66.8 percent in 2001 to 66.0 percent in 2004 and 2005. According to the BLS projections, the overall participation rate will continue its gradual decrease each decade and reach 60.4 percent in 2050.
Among the reasons cited for the trend:
1) The aging of baby boomers. A lower percentage of older Americans choose to work than those who are middle-aged. And so as baby boomers approach retirement age, it lowers the labor force participation rate.
2) A decline in working women. The labor force participation rate for men has been declining since the 1950s. But for a couple decades, a rapid rise in working women more than offset that dip. Women’s labor force participation exploded from nearly 34 percent in 1950 to its peak of 60 percent in 1999. But since then, women’s participation rate has been “displaying a pattern of slow decline.”
3) More young people are going to college. As BLS noted, “Because students are less likely to participate in the labor force, increases in school attendance at the secondary and college levels and, especially, increases in school attendance during the summer, significantly reduce the labor force participation rate of youths.”
So no matter who was president, and independent of the health of the economy, BLS projected in 2006 that labor force participation rates were going to go down.
But it’s also true that the decline has been even steeper than projected. For example, in that 2006 report, BLS projected the participation rate would decline to 64.5 percent in 2020. It’s already 1.7 percentage points below that in 2015.
According to an analysis by the Congressional Budget Office in February 2014, “[T]he unusually low rate of labor force participation in recent years is attributable to three principal factors: long-term trends, especially the aging of the population; temporary weakness in employment prospects and wages; and some longer-term factors attributable to the unusual aspects of the slow recovery of the labor market, including persistently low hiring rates.”
CBO estimated that between the end of 2007 (a year before Obama took office) and the end of 2013, about half of the decline in participation rates could be pegged to long-term demographic trends, about a third to “temporary weakness in employment prospects and wages,” and about a sixth to “unusual aspects of the slow recovery.”
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