The question of whether a retired person is considered unemployed by official labor statistics is a common point of confusion. Government economic reporting uses a strict, technical definition that distinguishes between a voluntary withdrawal from the workforce and a state of joblessness. Understanding this difference is necessary to accurately interpret reports on the national labor market and broader economic trends.
What It Means to Be Unemployed
Unemployment is a specific statistical condition defined by the Bureau of Labor Statistics (BLS), not merely the absence of a job. The official unemployment rate uses data from the Current Population Survey, requiring individuals to meet three precise criteria to be classified as unemployed. They must have been without a job during the survey reference week, been available for work, and made at least one active effort to find employment within the prior four weeks.
The requirement for an active job search is the defining factor separating the unemployed from other non-working populations. Individuals on temporary layoff expecting recall are also counted as unemployed, even without a recent search. This definition focuses the measurement on those actively seeking to participate in the labor market but who have not yet succeeded.
The Official Classification of Retirement
A person who has retired and is not looking for a job is officially classified by the BLS as “Not in the Labor Force.” This category includes all people who are neither employed nor unemployed, such as full-time students, homemakers, and those with disabilities. For retirees, this classification reflects a voluntary decision to withdraw from the workforce.
Because they have not actively looked for work within the last four weeks, retirees do not satisfy the active job search requirement and are formally excluded from the count of the unemployed. They are considered outside the sphere of active labor market engagement, distinct from those who are actively seeking work and available to take a job.
Why This Distinction Matters for Economic Reporting
The separation of retirees from the unemployed is significant because it directly impacts the calculation of the official unemployment rate, known as U-3. The U-3 rate is calculated as the total number of unemployed people divided by the civilian labor force (the sum of the employed and the unemployed).
Individuals classified as “Not in the Labor Force,” including retirees, are not part of the civilian labor force and are therefore not factored into the denominator of this calculation. If these millions of people were included, the official unemployment rate would be drastically and inaccurately inflated. The current methodology ensures the U-3 rate measures joblessness among those available and actively seeking work, providing an accurate assessment of the job market’s health.
Scenarios: When a Retiree Becomes Unemployed
While most retirees remain classified as “Not in the Labor Force,” their statistical status changes if their intentions shift. Should a retired person decide to re-enter the labor market and begin an active job search, their classification immediately changes.
By meeting the three BLS criteria—no job, available for work, and actively seeking employment—they transition from being outside the labor force to being counted as unemployed. This change accurately reflects their new labor market behavior, distinguishing between a person who is simply not working and one who is actively trying to secure a position.
Retirement and the Labor Force Participation Rate
While retirees do not affect the official unemployment rate, their growing numbers have a measurable impact on a different economic indicator: the Labor Force Participation Rate (LFPR). The LFPR is the percentage of the civilian noninstitutional population that is either employed or actively looking for work, calculated by dividing the labor force by the total population aged 16 and older.
Because retirees are not working and are not actively seeking work, they are not included in the labor force, causing the LFPR to decline as the population ages. The long-term downward trend in the LFPR is largely attributed to demographic shifts, specifically the large cohort of Baby Boomers reaching retirement age. This indicator provides context on the proportion of the population engaged in the labor market.