Question #4 for 2025: What will the participation rate be in December 2025?

From February 2020 to April 2020, 12 million people had left the labor force due to the pandemic.   By November 2024, the labor force was about 4 million higher than the pre-pandemic high.  

The labor force is from the BLS household survey, and this survey probably missed some of the net immigration over the last few years.  From housing economist Tom Lawler:

For those who follow the household survey employment number along with the nonfarm payroll survey numbers, it is worth noting that the housing survey numbers are “controlled” to the latest Census population estimates and one-year ahead projections. As such, the 2024 household employment numbers are “controlled” to the Vintage 2023 employment projections for 2024. The Vintage 2023 projection for YOY resident population growth from December 2023 to December 2024 was 1,724,847, compared to the Vintage 2024 projection over this period of 2,745,741. As such, when the household survey employment estimates for the end of this year are revised in January to reflect population benchmark revisions, one should expect a sizable upward revision.

This will revise up the number of people employed in the household survey however this will not impact the participation rate.

Population growth had been weak in the 2010s, but picked up over the last few years, primarily due to more immigration.   However, net immigration slowed in late 2024 and will likely slow further in 2025.

The second graph shows the participation rate for “prime age” workers (25 to 54 years old). The 25 to 54 participation rate was at 83.5% in November 2024 Red), above the pre-pandemic level of 83.0%.  This suggests all of the prime age workers have returned to the labor force.

Since almost all of the workers impacted by the pandemic have returned to the labor force, demographics will be the key driver of the participation rate in 2025 (barring some unseen event).  Demographics will be pushing the participation rate down over the next decade, so, my guess is the participation rate will decline to around 62.2% in December 2025.