Not in the Labor Force
In addition to measuring the number of employed and unemployed in the United States, the CPS also tracks those individuals who are not in the labor force. This is a large subset of the population, as it includes those who are too young, retired, or have other reasons for not participating in the labor force.
What does not in the labor force (NiLF) mean?
Just as employed and unemployed have very specific definitions, NiLF refers to a specific but large subset of the population who are not working. Some individuals are NiLF due to age, especially children. Many times individuals are NiLF due to retirement, but being NiLF could also be the result of other factors such as disability, childcare, or illness. What all of these disparate groups have in common is that they are not employed and are not recently seeking work. Note that in the CPS, recently seeking work refers to individuals who looked for work in the last four weeks.
How to calculate NiLF?
The variable PEMLR, one of the most frequently used CPS variables, is the easiest way to calculate headline NiLF numbers. PEMLR, or the monthly labor force recode, can be used to calculate the number of employed, unemployed, and NiLF individuals in the sample.
PEMLR – Monthly Labor Force Recode
1 Employed – At work
2 Employed – Absent
3 Unemployed – On Layoff
4 Unemployed – Looking
5 Not in the Labor Force – Retired
6 Not in the Labor Force – Disabled
7 Not in the Labor Force – Other
An estimate of the number of NiLF individuals in a given month can be obtained by grouping and tallying the entries in categories 5 through 7. Similarly, by tallying the employed and unemployed, PEMLR can produce a monthly estimate of the labor force participation rate.
More detailed information on those not participating in the labor force are found in other variables in the CPS. For instance, some questions ask whether NiLF individuals would like a job despite not participating in the labor force. Others focus on identifying discouraged workers, disabled individuals, or the retired.