Nearly one million Americans have walked away from the workforce over the past year. In June alone, 720,000 people threw in the towel, pushing the labor force participation rate to 61.5%—the lowest since March 2021 and, outside pandemic-era lows, the weakest in five decades. Experts are scrambling to explain the exodus, but no single theory holds water.
Some point to older workers cashing out on a booming stock market, comfortable with their 401(k)s. Yet that doesn’t explain why the participation rate for prime-age workers, those 25 to 55, has also fallen. Others blame return-to-office mandates and caregiving costs driving women out of the workforce. But men are leaving too, at similar rates. The data is stubbornly refusing to tell a neat story.
What is clear is that this sustained decline carries serious consequences. Bill Adams, chief U.S. economist at Comerica Bank, warns that economic growth relies on two engines: productivity and a growing workforce. Productivity is still humming along, but the second engine is sputtering. “Bringing more workers into the economy is not contributing as much to growth as it has in the past,” Adams said.
The unemployment rate ticked down from 4.3% to 4.2% in June, a headline that might seem like good news. But Glassdoor chief economist Daniel Zhao called it a drop for “the wrong reasons.” Hiring has picked up, yet the unemployment rate is falling not because more people are landing jobs, but because fewer are even looking. “This points to a labor market that’s stubbornly refusing to reaccelerate,” Zhao said.
Nicole Bechaud, an economist at ZipRecruiter, points to a wave of discouraged long-term unemployed workers. “Somebody who became unemployed a year ago, when it was really, really hard to find a job, is likely still unemployed right now,” she said. Employers, she added, prefer to hire someone who just left a job or is still working, leaving the long-term unemployed on the sidelines.
Michele Evermore, a senior fellow at the National Employment Law Project, describes the job hunt as “a real headache” in 2026. After multiple rounds of interviews, rejection stings. Some workers are using the time to retrain, learning new skills or returning to school as artificial intelligence reshapes employer expectations.
Jasmine Tucker, vice president of research at the National Women’s Law Center, says return-to-office mandates combined with high caregiving costs are hitting women hard. “If a family is trying to make ends meet and one person has to leave the labor force because they can’t pay for care, it’s going to be the person who makes less, and that tends to be women because of the wage gap,” Tucker said.
Evermore adds that employees with disabilities are also being squeezed by rigid return-to-office policies. “There are plenty of jobs that you could probably continue to do from home, but employers are taking this sort of hard-line stance,” she said.
The participation rate for workers 55 and older fell to 37.1% in June, a 21-year low. Adams notes that a booming stock market in 2026 has made retirement feel more attainable for those with healthy 401(k)s. But Evermore cautions that for many, the decision isn’t entirely voluntary. “A lot more people think the decision to retire is going to be totally up to them, and oftentimes it’s up to their bodies,” she said.
Looking ahead, Adams warns that the U.S. will have to confront a long-term worker shortage driven by demographic shifts. “The U.S. is going to have to figure out how to manage shortages of workers affected by these demographic changes,” he said.
Reach Rachel Barber at rbarber@usatoday.com, follow her on X @rachelbarber_, and subscribe to her newsletter “Making More of Your Money” here.
