Labor force participation is static, a puzzle to the Fed.

Millions of workers remain on the fringes of the job market and are only slowly pulling back – posing a serious challenge for the Federal Reserve as policymakers try to assess how far the US economy is falling short of its full employment targets.

The labor force participation rate, a measure of how many people are employed or actively looking for work, has been kept constant for months. 61.6 percentIt fell 1.7 points from February 2020 level.

People’s participation in their best years of work is slowly increasing, 81.7 percent In October, up from 81.6 percent in September, but that remains low compared to the pre-pandemic rate. In February 2020, 82.9 percent of 25 to 54 year olds were in the workforce.

Fed officials had initially hoped that the labor market could return to levels of participation and employment before the health crisis. But with more than 20 months into the pandemic, anecdotes of early retirement abound and many workers reevaluating their work lives, it’s less clear what happens next. The Fed sees room for further development, but officials have also expressed modesty about their prospects.

Fed Chairman Jerome H. Powell said, “Now the temptation at the start of the recovery was to look at the data for February 2020 and say, ‘that’s the target’. pointed out at a press conference when asked what is full employment this week.

He later added, “I think there is a lot of humility here when trying to think about what the maximum employment would be.”

It’s unclear what keeps many workers away at a time when job opportunities are plentiful. It could be what is colloquially called the Great Resignation: People shaken by the pandemic are reevaluating their lives and livelihoods. It may be that the recent wave of Delta variant coronavirus infections has sent many workers home. Childcare shortages and fears of infection are keeping some workers temporarily out, and early retirement may have fired others more permanently.

But when these winds will subside and which ones will be more temporary rather than permanent is an open question.

Mr. Powell noted, for example, that officials expect the reopening of schools and the expiration of extended unemployment insurance will return a wave of workers to the labor market. That hasn’t taken shape yet, “interestingly,” he said.

“Ideally, we would see further development of the labor market in a context where there is no further Covid growth,” Powell said this week.