Labor Force Participation Can Be a Bumpy Ride

May 29, 2019

Eastern Oregon’s labor force participation rate dropped by 1.2 percentage points in 2018. All counties in the region saw a decrease in the participation rate over the year. Participation dropped in 28 Oregon counties, as well as the state overall, as the number of people retiring increased. Labor force participation was steady in two Oregon counties and increased in six. The long-term trend for Eastern Oregon is a bumpy road downhill, as seen in the accompanying chart.
Participation in the labor force was strongest in 2002 and similarly strong in 2011. Low points came from 2005 to 2007 and 2013 to 2015. The peaks and valleys of Eastern Oregon’s labor force participation seem counterintuitive given the official national timeline for the 2001 and 2007 recessions. Labor force participation strengthened in the region during both recessions, and continued to strengthen for a relatively short time following the official end of these recessions. Then participation weakened in the region and was lowest during periods of economic expansion.

Population dynamics and the timing of regional recovery may explain this counterintuitive behavior. While the 2001 recession was short, officially ending in November of the same year, Eastern Oregon saw employment decrease from 2002 until 2005. The region then added employment again until the Great Recession hit in 2007. Officially, the Great Recession ended in June 2009, but employment in Eastern Oregon didn’t bottom out until January 2010. Employment was roughly flat thereafter, until 2015 when the region finally started to turn up the heat on economic recovery.
Growth in the civilian noninstitutionalized population was steady from 2001 to 2009, which suggests that new participants were moving into Eastern Oregon during both recessions and adding to the region’s labor market while the economy was still struggling. In addition, labor force growth likely ramped up as well in the region as family members who normally choose not to work entered the labor force to compensate for family members who lost jobs or saw work hours cut. Given these factors and allowing for a certain degree of lag, labor force participation tracks roughly with the timing of employment gains, losses, and stagnation in Eastern Oregon. The biggest outlier appears to be the drop in participation in 2018.

The trend of an aging population, and the hollowing out of the prime working age population, continues to drag on labor force participation over the long haul in Eastern Oregon. The data table highlights this, as the long-term trend of declining participation is strongest in counties with a high concentration of older residents (Grant, Harney, and Wallowa). Union County partially bucks this trend. The county’s population does continue to age. However, students at Eastern Oregon University prop up the younger population, while at the same time contributing to the decrease in labor force participation. Malheur County is the outlier for the region with a long-term increase in labor force participation. Although Eastern Oregon has a lower labor force participation rate than Oregon overall, the region has been in line with the statewide trend since 2011. As a long-term trend, labor force participation in Eastern Oregon continues to descend along a bumpy road.