{"id":3069,"date":"2026-07-09T10:40:52","date_gmt":"2026-07-09T10:40:52","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=3069"},"modified":"2026-07-09T10:40:52","modified_gmt":"2026-07-09T10:40:52","slug":"labor-force-participation-falls-to-61-5-the-lowest-in-50-years-outside-covid-and-economists-say-its-not-just-people-giving-up","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=3069","title":{"rendered":"Labor force participation falls to 61.5%, the lowest in 50 years outside COVID, and economists say it\u2019s not just people giving up"},"content":{"rendered":"
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\u201cHistorically, you\u2019ve been able to look at jobs numbers like what came out on Friday and say, \u2018okay, there was a decline in leisure and hospitality. Well, that means there\u2019s less demand for those workers,’\u201d Ullrich told Fortune<\/em>. \u201cBut I think now, and more commonly as we go forward, it actually could be labor supply driving some of that. There are two reasons why you might not add jobs in a month: One is there\u2019s no demand for workers, the other is there is demand, but there\u2019s not enough supply.\u201d<\/p>\n

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Ullrich co-authored a May report from Indeed Hiring Lab, \u201cThe Great Mismatch: How a Shrinking Workforce, AI, and Labor Reallocation Will Define the Next 15 Years,\u201d projecting the labor force would begin shrinking in 2026. The finding was particularly driven by a combination of immigration policy changes and what Ullrich calls \u201cthe demographic cliff\u201d\u2014the accelerating retirement of the baby boomer generation. The report estimates the labor force will decline by roughly 3.7%, or 5.9 million workers, between 2025 and 2032, before partially recovering. It also projects the aggregate unemployment rate could climb by 0.5 to 3.5 percentage points by 2040, to nearly 8% in the more severe scenario.<\/p>\n

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\u201cWhen we first ran the numbers and saw that we were actually predicting the labor force was going to start declining this year, I was like, \u2018oh gosh, I don\u2019t know,’\u201d Ullrich said. Around the same time, then-Fed Chair Jerome Powell reporters the economy was seeing \u201cvery, very low, nonexistent, really\u201d growth in the labor force. \u201cI was like, okay, I think we are here with the demographic changes and the share of baby boomers that are leaving the workforce.\u201d<\/p>\n

The Bureau of Labor Statistics\u2019 own 10-year projections already point to declining participation, Ullrich said, and those projections predate the current immigration restrictions. <\/p>\n

\u201cI think when their estimates come out this next year, they\u2019ll be even more severe declines, because immigrant workers are both younger than native-born workers, but also have higher labor force participation rates.\u201d<\/p>\n

Ullrich also pointed to BLS data comparing labor force participation between foreign-born and native-born workers, showing foreign-born individuals have a participation rate of 66.3%, compared with 61.6% for native-born workers. Among men, the gap widens: 76.9% for foreign-born men, as compared to 65.8% for native-born men. But the pattern flips among women: Native-born women have higher participation rates than immigrant women, particularly immigrant women with young children, who are less likely to work than their native-born counterparts.<\/p>\n

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Age compounds the effect: Roughly 70.1% of foreign-born individuals are between 25 and 54, considered the \u201cprime-age\u201d years, as compared with 62.7% of native-born Americans.<\/p>\n

\u201cIf immigration declines, you have two impacts that are related: Immigrant workers tend to be younger than native-born workers, so by definition you get an older workforce, and labor force participation rates, even within the same age groups, are higher, especially for foreign-born men,\u201d Ullrich said.<\/p>\n

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AI is accelerating a mismatch in which the available workers aren\u2019t lining up with where the job openings are. That\u2019s because the technology is projected to hit the information sector, financial activities, and professional business services hardest, which are exactly the sectors with the youngest workforces and the most graduates trying to get in. In the report\u2019s more AI-disruptive scenario, the combined unemployment rate across those three sectors rises from 4% in 2025 to 12% by 2032: 21.2% in information, 11.8% in financial activities, and 10.7% in professional and business services. <\/p>\n

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\u201cPeople go and study things to go work in finance or computer science because those have historically been really successful paths, and so there continues to be people trying to flow into those sectors when actually AI is impacting those first and most severely,\u201d Ullrich said.<\/p>\n

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Meanwhile, sectors with rapidly aging workforces, like in government, health care, education, and construction, aren\u2019t attracting enough new entrants, and the report finds AI does little to close that gap. Ullrich cited internal research she\u2019s been doing on health care demographics: In New Mexico, 39.2% of physicians are over age 60. Nursing has a related but different bottleneck, the report finds: 68% of nurses entered the profession directly, and 72% who leave a nursing job stay in the field, which is evidence of how high credentialing and training barriers seal off the profession from workers in other industries, even when there\u2019s plenty of demand.<\/p>\n

Low-wage, high-demand fields like home health aide work face the starkest supply gap of all, Ullrich said, as demand rises with an aging population but pay hasn\u2019t kept pace: \u201cIt\u2019s a mismatch problem. In theory, AI should make the match easier, but it still creates this friction that we estimate will bring down employment.\u201d<\/p>\n

But so far in how much the tech has advanced, there\u2019s still more to be desired. <\/p>\n

\u201cI do not believe there are a lot of AI agents doing work that people used to do, yet,\u201d she said. \u201cThe investment choices, the purchasing choices of firms of increasing capex spending, that\u2019s offsetting labor. That\u2019s an indirect impact of AI.\u201d<\/p>\n

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Indeed modeled the labor force through 2040 under two scenarios: one in which AI destroys a significant number of jobs, and one in which it augments human labor and creates new ones. <\/p>\n

\u201cNo matter what we did with AI in our model, demographics were the bigger story,\u201d Ullrich said.<\/p>\n

Ullrich also flagged the upcoming wealth transfer from baby boomers, the wealthiest generation in U.S. history, to Gen X and older millennials as a factor Indeed\u2019s current model doesn\u2019t yet capture. <\/p>\n

\u201cEconomic theory would tell you that would impact the labor decisions of those people that get those transfers,\u201d she said, suggesting retirement ages could fall further for the generations behind boomers unevenly, concentrated among white-collar workers likely to inherit the most.<\/p>\n

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That some of the drop in participation may be voluntary rather than distress-driven is also consistent with how financially secure households say they feel. In the Fed\u2019s Survey of Household Economics and Decisionmaking, the share of adults who say they\u2019re at least doing okay financially has held steady at 72%-73% for the past three years\u2014down from a stimulus-inflated 78% in 2021, but not the kind of deterioration that would point to widespread economic desperation behind June\u2019s exodus from the labor force. Still, that\u2019s before the quick technological change that\u2019s been made in the recent few years.<\/p>\n

\u201cIt\u2019s incredibly interesting to be in this demographic situation at the same time you\u2019re in a period of technological innovation,\u201d she said.<\/p>\n

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Although AI and tech innovation is blamed for that drop, it has more to do with the lack of supply relative to the number of jobs that are available. <\/p>\n","protected":false},"author":1,"featured_media":3068,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[410],"tags":[],"class_list":["post-3069","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-labor"],"yoast_head":"\nLabor force participation falls to 61.5%, the lowest in 50 years outside COVID, and economists say it\u2019s not just people giving up - Cross Country Moving Team<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/crosscountrymovingteams.com\/?p=3069\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Labor force participation falls to 61.5%, the lowest in 50 years outside COVID, and economists say it\u2019s not just people giving up - 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