Labor Force | Meaning and Definition

What is labor force?

It is the number of people in the workforce, defined as those who are currently employed or unemployed and those seeking employment. Its size can change over time as people enter or leave the workforce. Its makeup can also change as the proportion of employed or unemployed people changes. 

Importance of labor force

•   It is necessary for economic growth.
•   It is necessary for producing goods and services.
•   It is necessary for generating tax revenue.
•   It is necessary for providing social welfare benefits.
•   It is necessary for maintaining a high standard of living. 

Difference between the labor force and workforce

The difference between the labor force and the workforce is confusing for many. Although they are often used interchangeably, there is a distinct difference between them.  

The labor force refers to the total number of people available for work, including those unemployed and underemployed. On the other hand, the workforce only includes those who are employed. In other words, the labor force includes everyone who is potential labor-power, while the workforce only includes those who actualise their labor-power. 

This distinction is important because it provides a more accurate picture of the state of employment in a given economy. 

Female labor participation rates have continued to rise in recent years. This is largely due to increased participation by women with young children, who are now more likely than ever to be employed.