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Oregon's Labor Force Participation Rate Continued to Fall in 2013
by Tracy A Morrissette
Published May-19-2014

 
The downward trend in Oregon's labor force participation rate (LFPR) continued in 2013, as the LFPR declined by 1.5 percentage points from 62.9 percent in 2012 to 61.4 percent in 2013. Oregon's LFPR of 61.4 percent in 2013 is a new record low for this series that began in 1976. Prior to 2012 and 2013, Oregon's lowest LFPR was in the first year of the series, 63.0 percent in 1976. However, based on historic national LFPR trends before 1976, we can assume that Oregon's LFPR was lower than 63.0 percent in the years prior to 1976.

Definitions
 
The Civilian Noninstitutional Population (CNP) includes everyone ages 16 and older who is not on active duty in the Armed Forces or residing in prisons or homes for the aged.

The labor force is a subset of the CNP. It includes those who are employed or unemployed.

The labor force participation rate (LFPR) is the percentage of the CNP who are in the labor force. The LFPR is calculated by dividing the labor force by the CNP and multiplying by 100.

Oregon's Labor Force Participation Rate Trends Are Not Unique
 
Oregon's labor force participation rate (LFPR) gradually increased from 63.0 percent in 1976 to 68.9 percent in 1998, as the Baby Boom generation and women increasingly participated in the labor force. After 1998, however, Oregon's LFPR has steadily declined from that peak of 68.9 percent to the series low of 61.4 percent in 2013.

Oregon's LFPR has followed roughly the same pattern as the United States LFPR (Graph 1). The U.S. LFPR gradually increased from 61.6 percent in 1976 to 67.1 percent in 1997 to 2000. Following this peak of 67.1 percent, the U.S. LFPR has generally declined to 63.2 percent in 2013, the lowest U.S. LFPR since 1978. Likewise the LFPR for the Pacific Census Division, which includes the states of Oregon, California, Washington, Hawaii, and Alaska, increased from 62.7 percent in 1976 to 67.8 in 1989. After declining slightly in the mid-1990s before reaching another peak in 2000 at 67.5 percent, the Pacific LFPR has fallen once again to 62.7 percent in 2013. The Pacific LFPR of 62.7 percent in 2013 was the lowest LFPR in this series since 1976, the start of the series when it was the same value of 62.7 percent. Overall, LFPRs for these areas have recently fallen to levels not seen since the 1970s.

Graph 1
Labor force participation rates 1976 to 2013
Labor Force Participation Rates Since the Late 1990s
 
Although the sharp declines that started in 2009 really brought attention to the LFPR, LFPRs have been generally declining since the late-nineties. The U.S. LFPR went from 67.1 percent in 1997 to 2000 to 66.0 percent in 2004 and 2005. Similarly, Oregon's LFPR went from 68.9 percent in 1998 to 65.7 percent in 2005. Both the U.S. and Oregon LFPRs were basically flat from 2005 to 2008 during the economic expansion that occurred during those years; the U.S. LFPR hovered around 66.0 percent and Oregon's LFPR hovered around 65.7 percent during this time period. Starting in 2009 however, LFPRs began to fall rapidly. The U.S. LFPR went from 66.0 percent in 2008 to 63.2 percent in 2013, and Oregon's LFPR went from 65.8 percent in 2008 to 61.4 percent in 2013.

The Oregon Employment Department published a special report on the labor force in June 2013 exploring these trends in detail. The analysis in this report covered data through 2012. More information and background on the trends in the labor force can be found in this report at  www.QualityInfo.org/pubs/lfpr.pdf.

Three Major Reasons for Decline in Oregon's Labor Force Participation Rate
 
Although a number of factors can potentially impact the LFPR, three major reasons were identified in the labor force report from June 2013 for the decline in Oregon's LFPR since the late 1990s:

Aging Workforce

As the Baby Boom Generation ages, they are moving out of the "prime" working years (ages 25 to 54) and entering an age group where labor force participation rates decline significantly. Even though the participation rate among Oregon's older population is increasing, this age group still has lower participation rates than the prime working age group. As the older group makes up a larger share of the population, overall participation rates fall.

Younger Workers' Declining Participation

The labor force participation rate among Oregon's youth and young adults (ages 16 to 24) has been falling for more than two decades, with the sharpest decline among teenagers. There are two main reasons: a growing number of adults working in jobs historically held for teens, and an increasing emphasis on school and college.

Results of the Great Recession

Since the late 1990s, the U.S. has experienced two recessions; one in 2001 and the "Great Recession" from late 2007 to mid-2009. Although there can be a lagged effect that varies depending on the severity of the recession, LFPRs tend to fall during or immediately after recessions as people leave the labor force for reasons such as discouragement over job prospects and school or training attendance until the job market picks back up.

Oregon's Labor Force Participation Rates Continued to Decline in 2013
 
Recent LFPR data made available since the publication of the labor force report in June 2013 show that several of the basic trends identified in the report continued into 2013. Generally, along with the overall decline in the state LFPR between 2012 and 2013, most LFPRs for the demographic groups in Oregon declined as well.

Oregon LFPRs for both genders declined in 2013 (Graph 2). The LFPR for men declined from 68.2 percent in 2012 to a series low (that began in 1976) of 65.9 percent in 2013. The LFPR for men has fallen sharply since 2010, as the bursting of the nation's housing bubble led to sharp job losses in the manufacturing and construction industries, two sectors of the economy that historically employ a large number of men.

The LFPR for Oregon women declined from 58.5 percent in 2012 to 55.6 percent in 2013, the lowest percentage in the series since 1982. The LFPR for women had actually crept higher from 58.7 percent in 2006 to 61.3 percent in 2011, despite the fact that the economy was in a major recession from late 2007 to mid-2009. After these five years of steady increases in workforce participation, the LFPR for women fell sharply from 61.3 percent in 2011 to 55.6 percent in 2013. Part of this is likely due to more recent job losses in female-dominated sectors, notably local government education.

Oregon LFPRs for the three general age ranges declined in 2013 (see Graph 3), with the LFPR for those age 16 to 24 years and those age 55 years and over declining by the largest amounts from 2012.

The LFPR for ages 16 through 24 years declined by 3.2 percentage points from 2012 to a series low (that starts in 1976) of 54.8 percent in 2013. The LFPR for this age group was fairly consistent around 70.0 percent from 1978 to 1999. Since 2000, however, the LFPR for younger workers has been generally declining, and 2013 showed a continuation of that longer term trend. Reasons for falling labor force participation among this age cohort include an increased emphasis on school related activities and slow job growth during recessions. In times of slow job growth, it's easy to image that individuals within a cohort with relatively limited work experience may find it difficult to find suitable employment.

Oregon's LFPR for ages 25 to 54 years, usually considered to be "the prime working age" since this age group tends to have the highest LFPR among all age groups, declined by the smallest amount of the three general age categories in 2013. The LFPR for this age group declined by 0.5 percentage point from 81.1 percent in 2012 to 80.6 percent in 2013; the lowest LFPR for this age cohort since 1979 when it was 77.7 percent.

Oregon's LFPR for those age 55 years and over declined by 4.4 percentage points from 2012 to 36.3 percent in 2013. Although the decline from 2012 was rather steep, unlike the other two age groups that fell to a record low and the lowest level since the late-seventies, the LFPR for this age group remains well above the record low for the series of 27.1 percent in 1992. This age group is the only age group projected to have a growing labor force participation rate through 2020, as the Baby Boom Generation (born between 1946 and 1964) ages from the "prime working age" cohort into this age cohort. Like Oregon, the U.S. LFPR for those aged 55 years and over declined, albeit much more slightly, from 40.5 percent in 2012 to 40.3 percent in 2013.

Oregon's LFPR continued on the downward trend that began in the late 1990s by falling to 61.4 percent in 2013, the lowest LFPR in the series since it began in 1976. Likewise, the U.S. LFPR fell to 63.2 percent in 2013, the lowest LFPR for this series since it was 63.2 percent in 1978. Along with the overall decline in the LFPR, the LFPR for most of the demographic groups in Oregon declined in 2013 as well.

Graph 2
Oregon labor force participation rates by gender
Graph 3
Oregon labor force participation rates by age group