Small Business Glossary and Definitions

The Labor Force Participation Rate is the percentage of employed and unemployed workers compared to the total potential labor force. In addition to employed and unemployed workers seeking employment, the total potential labor force includes people who are not working or seeking work by choice.

Examples of people who are not working or seeking work include students, homemakers, prisoners, and retirees. These groups are not included in the participation rate because they are not actively seeking work by choice or otherwise.