- The labor force participation rate, which tracks people working or looking for work, dropped in April.
- It's a sore spot amidst a still-booming economic recovery, with the country adding 428,000 jobs.
- The drop might be a monthly blip, but it's also a signal that labor shortages are still sticking around.
In a largely rosy report on the labor market's progress, one measure stood out as a clear reminder that the pandemic is still weighing on the US recovery.
Labor force participation dipped to 62.2% from 62.4% in April, according to government data published Friday morning. That reflected the lowest rate since January and took some steam out of the report that otherwise showed the labor market adding jobs at a stronger-than-expected pace. The measure tracks the number of Americans either working or actively seeking work, meaning the overall pool of workforce participants shrank last month.
"It's the first time since May of 2021 that we saw a dip in participation," Secretary of Labor Marty Walsh told Insider. "I don't have a real good answer for that one."
The prime-age labor force participation rate, which tracks 25 to 54 year olds, also dropped from March to April. Both the overall and prime-age rates are still below the levels seen before the pandemic in February 2020.
As Nick Bunker, economic research director at Indeed Hiring Lab, pointed out on Twitter, the drop in the prime-age rate in April was "due entirely to a decline in female labor force participation."
Bunker noted that this is just one month of data, however. Even so, there needs to be a "more robust recovery" in the industries where there are a lot of mothers and women, especially mothers of color.
The decline offers yet another sign that the labor shortage is here to stay. The phenomenon first emerged in early 2021 as employers struggled to rehire amid the economic reopening. Job openings dramatically outpaced available workers, and data out earlier in May showed the imbalance intensifying through March. Job openings and quits both rose to record highs, and openings officially doubled the number of workers available to fill them.
"I think the picture is of a healthy labor market, but we certainly don't want to see labor force participation start to backslide," Daniel Zhao, senior economist at Glassdoor, told Insider. "That's the wrong way to make improvements on the unemployment rate."
Employers can help ensure their employees who want to keep working don't have to drop out of the labor force. Workplace flexibility is likely to remain a top priority for working parents. There are other benefits that would also be helpful to make sure they can stay in the workforce, such as childcare benefits.
Policies that allow mothers "to not only work in the paid labor market, but also balance that with demands at home" would certainly help make sure women can continue working and stay part of the labor force, Bunker said.