June 17, 2024 

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DISPOSABLE INCOME: The total income that can be used by the household sector for either consumption or saving during a given period of time, usually one year. This is the income left over after income taxes and social security taxes are removed and government transfer payments, like welfare, social security benefits, or unemployment compensation are added.

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Anyone who is not classified by the Bureau of Labor Statistics (BLS) as members of the labor force, either employed persons or unemployed persons. This catch-all category is largely comprised of several notable segments of the population, such as young, elderly, homemakers, and military. However, it includes others who are either unwilling or unable to engage in productive activities for assorted reasons. The "not in the labor force" numbers are computed monthly by the BLS along with other employment and labor force information using data generated by the Current Population Survey.
The combination of employed persons and unemployed persons is the official specification of the civilian labor force, meaning anyone who does not qualify for the civilian labor force is classified as "not in the labor force." Some people are excluded automatically by virtue of their demographic characteristics, and others are excluded by virtue of decisions they make.

Automatic Exclusions

Three of the seven basic groups not in the labor force are automatically placed in the not in labor force category due to the basic specification of the "noninstitutionalized civilian labor force." They are the young, military personnel, and institutionalized members of the population.
  • Young: Anyone under 16 years of age is automatically placed in the not in labor force category by the BLS. The reasoning is that these young folks do not work, so why bother. More specifically, child labor laws legally restrict the employment of anyone under 16 years old from working, except in special cases (child actors and farm labor are two). In addition, laws also require anyone under 16 years old to attend school, so they are not generally available for work. Social customs also limit the employment of anyone under 16 years of age.

  • Military: Military personnel are also automatically relegated to not in labor force status. This segment of the population is excluded from the civilian labor force because military personnel are not considered as resources available for productive activity. Moreover, the military operates under its own set of "employment" rules, apart from resource and labor markets that exist in the rest of the economy. The reasoning behind excluding this segment is perhaps most obvious during periods of rising and declining military activity (that is, during and immediately after wars). If military personnel are included in the labor force, then a major movement of civilians into the military has no apparent affect on the labor resources available for productive activity, when in fact, the quantity of labor available for domestic production declines.

  • Institutionalized: Members of the population who have been institutionalized are also automatically excluded from the "noninstitutionalized" civilian labor force. The institutionalized population includes people in correctional facilities (prisons and jails), mental or psychiatric hospitals, and nursing homes. This segment of society, much like those under 16 years of age, is excluded because these folks are essentially unavailable for productive activity.

Excluded by Choice

Four other basic groups that make up the not in the labor force category are there largely by choice. In many cases, individuals in these groups have consciously decided to pursue other activities and to exclude themselves from employment possibilities. In other cases, they have pursued a particular path that largely prevents them from entering the labor force. The four groups are homemakers, students, elderly, and marginal workers.
  • Homemakers: Homemakers (housewives, househusbands, and others) who devote their "productive" efforts attending to family or household responsibilities, find themselves in the not in the labor force category. They might be able to work as a paid employee, but they are essentially unwilling, choosing instead to pursue homemaker activities.

  • Students: Another major contingent of those who have chosen to remain out of the labor force are students 16 years of age or older who pursue education full-time (both high school and college). This group of students is not automatically excluded like the under 16 year age group. They could work (and many do), but they have chosen to remain out of the labor force.

  • Elderly: A third contingent of humans who have decided, more or less, to leave the labor force is retirees. After years of productive effort, most of the elderly decide to cash in their IRAs, file for Social Security, and attend to assorted leisurely pursuits. While some retire because they have reached a "mandatory" retirement age with their employer, in many cases they could seek employment elsewhere, if they so chose.

  • Marginal Workers: A last group of individuals who have decided to be apart from the labor force is workers who are marginally-attached to the labor force. The broad group includes those who are willing and able to work, but have been unemployed and have stopped seeking employment. Marginal workers largely include discouraged workers who have stopped seeking employment because they believe no jobs are available, as well as others who stopped looking for other reasons.

A Few Examples

Residents of the hypothetical city of Shady Valley offer a few examples of people who are not in the labor force.
  • Penelope Pumpernickel, Too Young: Penelope Pumpernickel receives income from delivering the Shady Valley Gazette-Tribune-Journal newspaper to information-hungry residents every morning. Penelope would seem to be an ideal candidate for inclusion in the civilian labor force. She is paid to engage in the productive activity of delivering newspapers. This would not only seem to place her in the civilian labor force, but also the employed category. Unfortunately, Penelope is in neither. Being under 16 years of age, Penelope is excluded from the official civilian labor force or employed categories tabulated by the BLS. Penelope is not in the labor force.

  • Pollyanna Pumpernickel, Military Personnel: Penelope's mother, Pollyanna Pumpernickel has a paying "job" as a military air traffic controller. Pollyanna would seem to be another candidate for the civilian labor force. But she too is excluded. The reason is that Pollyanna is "employed" as an air traffic controller at the Major General Air Force Base, holding the rank of sergeant. Even though Pollyanna is performing productive work, comparable to that found in the private sector, as military personnel, Pollyanna is excluded from the civilian labor force.

  • Paul Pumpernickel, Institutionalized Prisoner: Ironically, Pollyanna was motivated to join the Air Force after her husband, Paul Pumpernickel, embezzled $236,689.23 from his employer, OmniBank Financial Corp., and fled to Tahiti with a younger women. However, justice caught up with Paul Pumpernickel, who is serving a 15-year prison sentence in the Shady Valley Correctional Facility. While Paul spends 8-hours a day learning a useful trade by making cork bulletin boards that are sold throughout the world, he is not in the labor force. The reason, of course, is that as a prisoner he is institutionalized.

  • Pascal Petterson, Homemaker: Pascal Petterson is a happy, well-adjusted guy who spends his day tending to household and family responsibilities. His wife, Paulette, an extremely successful producer of corporate training videos, is the family's primary income earner. Pascal left his job as a production manager at The Wacky Willy Company a few years back when Paulette's career began taking off, deciding his time was best spent caring for their two children, Pedro and Phyllicia. As a homemaker, Pascal is not in the labor force.

  • Perry Porter, College Student: Perry Porter plans to be a paleontologist, a goal that he pursues by attending classes full-time at the Ambling Institute of Technology. While Perry could conceivably work part-time at the pizza parlor, he has chosen to devote his entire energies to his paleontology pursuits. This decision places Perry in the not in the labor force category.

  • Poindexter Pullman, Retiree: Poindexter spent his entire working life as a pension-fund manager with the OmniBank Financial Corp. At the age of 67, Poindexter decided to reap the rewards of his own pension-fund management, and retire from the working life. He intends to spend his golden years traveling the country in search of the world's best hot fudge sundae. This decision has elevated Poindexter to the status of not in the labor force.

  • Peter Pankovic, Discouraged Worker: Peter Pankovic once had a job, a well-paying job at the HyFy Electronics Company (a leading record-player manufacturer). But when HyFy Electronics Company went bankrupt, Peter lost his job and has not been able to find another. During the first six months of unemployment, Peter actively searched for other jobs. But none were found. So he gave up. Over the past year, Peter has resigned himself to sleeping on his sister's sofa and eating left over pizza crust. He would like to work. And someday he will once again seek employment. But for now, he does nothing. This places Peter in the category of discouraged worker, which also means that he is not the labor force.


Recommended Citation:

NOT IN THE LABOR FORCE, AmosWEB Encyclonomic WEB*pedia,, AmosWEB LLC, 2000-2024. [Accessed: June 17, 2024].

Check Out These Related Terms...

     | employed persons | unemployed persons | discouraged workers | marginally-attached workers | part-time workers | unemployment rate, measurement problems | Current Population Survey | Bureau of Labor Statistics | labor force | civilian labor force | employment rate | employment-population ratio | labor force participation rate |

Or For A Little Background...

     | unemployment | unemployment rate | unemployment sources | macroeconomic problems | macroeconomic goals | factors of production | full employment | business cycles | contraction | expansion |

And For Further Study...

     | natural unemployment | unemployment problems | unemployment reasons | unemployment, production possibilities | full employment, production possibilities | macroeconomic sectors | gross domestic product | macroeconomic markets | resource markets | inflation | stabilization policies | government functions | underground economy | business cycle indicators |

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     | Bureau of Labor Statistics |

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