Changes in the U.S. Labor Supply

The U.S. workforce has evolved in the years since the COVID-19 pandemic. In the last year, two measures of participation in the workforce recovered to 2019 levels — the prime-age labor force participation rate and the prime-age employment-to-population ratio. However, in the past two years, the number of job openings has exceeded the number of unemployed people — raising concerns about the availability of workers. The composition of the workforce has also changed. The COVID-19 pandemic accelerated retirements, particularly among college-educated and White workers. Additionally, Gen Z has now surpassed Baby Boomers in the workforce — something we explore further below.

Contributors
Ian Page is a supervisory data scientist in the Office of Policy Development and Research, Employment and Training Administration, U.S. Department of Labor.

Kevin Reuss is an economist in the Office of Policy Development and Research, Employment and Training Administration, U.S. Department of Labor.

Zoë Zemper is a data scientist in the Office of Policy Development and Research, Employment and Training Administration, U.S. Department of Labor.

Editor
Kyle DeMaria is a workforce analyst and presidential management fellow in the Office of Policy Development and Research, Employment and Training Administration, U.S. Department of Labor.

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In this edition of Trendlines, we take a generational approach to explore changes in the U.S. labor supply since the COVID-19 pandemic. We look at the composition of the labor force over time, broad patterns in educational attainment across generational groups, and explore shifting reasons that have prevented people from looking for work. These findings shed light on the current state of the U.S. labor supply and provide preliminary insights into the characteristics of the future workforce.

Changes in the Generational Composition of the Labor Force

How has the generational composition of the labor force changed in the years since the COVID-19 pandemic? In the third quarter of 2023, the share of Gen Z workers in the labor force surpassed that of Baby Boomers for the first time. As of the second quarter of 2024, Gen Z workers were almost a fifth (18%) of the labor force, with Baby Boomers comprising 15% of the labor force. Millennials made up the largest share of the labor force (36%), while the Silent Generation has almost entirely retired (1%). Gen X occupied the second largest share (31%), and the Gen X share has declined modestly at a similar rate to that which the Millennial share has increased.

Generational share of the labor force

Source: analysis of CPS Basic Monthly Samples (2018–2024) accessed via IPUMS

Educational Attainment Across Generations

With Gen Z entering the workforce and Baby Boomers retiring, what can be gleamed about the education of the future workforce? The figure shows the distribution of the highest educational degrees obtained. Broadly speaking, from Baby Boomers to Millennials, there has been a shift away from only earning a high school diploma or equivalent, and younger generations have attained higher levels of formal education relative to older generations.

From Baby Boomers to Millennials, the share of workers without a high school diploma or equivalent has decreased from around 9% to 6.7%, and the share with only a high school diploma has decreased from 30.1% to 25.8%.

From Baby Boomers to Millennials, the share of workers with a Bachelor’s degree or higher has increased from around 34.4% to 43.6%. While the same share for elder Gen Z is lower (38.9%), many are still pursuing education and the share with only a Bachelor’s degree (32.8%) was higher than that for older generations.

It is not known for sure whether generational trends will continue with Gen Z until more of Gen Z come of age. For now, these metrics only show a glimpse into the educational levels of the future workforce.

Highest degree attained, June 2024

Note: Because many in Gen Z are still in school, the Gen Z group is restricted to those aged 24 years and older to enhance comparability across groups. The figure shows highest degree earned and therefore respondents are only counted once. For example, someone with a Master’s degree would appear once in the “Advanced degree” category and not in categories for previous degrees attained.
Source: analysis of CPS Basic Monthly Sample (June 2024) accessed via IPUMS

Workers on the Sidelines

What might be keeping people out of work who would otherwise like to work? The main reason identified by respondents to the Current Population Survey has changed between 2018 and 2024 and differed by generation group. The largest individual category among Baby Boomers was ill-health and physical disability reasons. For Gen X and Millennials, the top individual reason was family responsibilities. A persistent reason across all generations older than Gen Z was the labor supply and demand mismatch (i.e., respondents do not think they have the right skills or they cannot find work of the type they desire in their area). Gen Z respondents indicated that schooling and training have kept them from looking for work. Finally, for a sizeable share of respondents in each generation, there was not a clear single reason that they were not looking for work, which was captured in the “Other” category.

Main reason people who want a job did not look in the last four weeks

Notes: The “Other” category is a single response option and indicates that the answer from the respondent did not exclusively fit one of the categories. Several reasons were grouped together into larger categories. The “Labor supply and demand mismatch” category includes “Believes no work available in area of expertise”, “Couldn’t find any work”, and “Lacks necessary schooling/training”. The “Family responsibilities” category includes “Family responsibilities” and “Can’t arrange childcare”. A few reasons are not labeled (grey) because they have rates lower than 10% for all years; these include “Don’t know”, “Transportation problems”, “Other types of discrimination”, and “Employers think too young or too old”.
Source: analysis of CPS Basic Monthly Samples (2018–2024) accessed via IPUMS

Labor Market Metrics

Suggested Citation
Kyle DeMaria (ed.), Ian Page, Kevin Reuss, and Zoë Zemper, “Changes in the U.S. Labor Supply,” Trendlines, U.S. Department of Labor Employment and Training Administration, August 2024, https://www.dol.gov/sites/dolgov/files/ETA/opder/DASP/Trendlines/posts/2024_08/Trendlines_August_2024.html