San Francisco Fed reports drop in labor force participation among older workers

The US labor market is sending mixed signals, and the latest one is hard to ignore. July’s labor force participation rate dropped to 61.4%, down from 61.5% in June and a full percentage point below where it stood in December 2025. That 61.4% figure is the lowest since early 2021, when the economy was still staggering out of pandemic lockdowns. Strip out the pandemic period entirely, and you have to go back to 1976 to find a number this low. What’s actually driving the decline A St. Louis Fed analysis broke down the roughly 0.9 percentage point decline since December 2025 into three distinct causes. The single biggest factor, responsible for 43% of the decline, was a population-control revision by the Bureau of Labor Statistics in January 2026. The BLS periodically adjusts its population estimates to reflect updated census data, and this particular revision changed the assumed age composition of the US population. Ongoing demographic aging accounted for another 16% of the drop. The remaining 41% came from actual shifts in age-specific participation rates. Prime-age workers, those between 25 and 54, saw their participation rate fall approximately 0.47 percentage points over the six-m...