Oregon’s Labor Force Participation Trends for Ages 16 to 24 Years

by Tracy Morrissette

December 10, 2018

For more than two decades, the labor force participation rate (LFPR) – the percentage of the civilian noninstitutional population that is either employed or unemployed – for Oregon’s youth and young adult population has been on a general downward trend. The LFPR for people between the ages of 16 and 24 years dropped from a peak of 72.9 percent in 1996 to 54.2 percent in 2015, a considerable decline in workforce participation over that time period to the lowest annual percentage since comparable records began in 1978. Although the LFPR for this age group increased in 2016 to 54.9 percent and to 60.6 percent in 2017, the series remains at low levels relative to the years prior to 2000.

Decline in Workforce Participation was Steeper for Oregon’s Youth

The LFPR for Oregon’s youth (ages 16 to 19 years) declined more dramatically than for Oregon’s young adults (ages 20 to 24 years). The LFPR for Oregon’s young adults peaked in 1996 at 83.2 percent, and then generally declined to a record low of 71.0 percent in 2013. Having since increased to 74.4 percent in 2017, the LFPR for Oregon’s young adults is higher than it was in 2013, although lower than it was two decades ago.

The LFPR for Oregon’s youth peaked much earlier than for young adults, at 63.7 percent in 1989. Since reaching this peak in 1989, the LFPR for people ages 16 to 19 years has generally declined each year, falling by close to 30.0 percentage points from 1989 to a historical low of 33.5 percent in 2015. Like the LFPR for Oregon’s young adults, the LFPR for ages 16 to 19 years has increased over last few years to 40.4 percent in 2017. Despite the recent increase, the current LFPR remains well below the 1989 peak.

Oregon’s LFPR Trend Is Similar to the U.S.

The trends in Oregon’s youth and young adult LFPR look similar to youth workforce participation for the rest of the nation. The U.S. LFPR for ages 16 to 24 was near 68.0 percent for much of the decade of the eighties and near 66.0 percent for much of the nineties. Steady declines each year after 2000 put the series at 54.9 percent by 2012, a record low for this series that starts in 1948. The series edged up to 55.0 percent from 2013 to 2015, and back-to-back annual increases in 2016 and 2017 put the series at 55.5 percent; a slight increase but still near the historic low of 2012.

Changes in Youth Workforce Participation and School Enrollment

Data for both Oregon and the nation show fewer people between the ages of 16 and 24 years participate in the workforce today than in the decades of the eighties and nineties. Part of the reason for the decline can be found in school enrollment numbers. U.S. data show that school enrollment status impacts whether or not an individual is in the labor force – either with a job or currently seeking one. National LFPRs for ages 16 to 24 years vary by school enrollment status.

The LFPRs for people age 16 to 24 years for those not enrolled in school are higher than those who are in high school or enrolled in college as a full-time student. The total U.S. LFPR for ages 16 to 24 years was 55.5 percent in 2017. The LFPR was much lower for those enrolled in school, at 36.0 percent, than for those who were not enrolled in school at 77.5 percent. Part-time college students are more likely to be in the labor force. The LFPR for part-time college students, age 16 to 24 years, was very high at 81.5 percent while the LFPR for full-time college students was much lower at 43.1 percent.

Given that school attendance tends to reduce the likelihood of workforce participation, part of the decline in the LFPR for ages 16 to 24 years over the last two decades can be attributed to changes in school enrollment over time. A greater percentage of the age 16 to 24 population is enrolled in school today. In 1985, the year that U.S. school enrollment data are first published from CPS, 36.0 percent of people ages 16 to 24 years were enrolled in school. This percentage has risen steadily over time and reached 53.1 percent in 2017. A greater share of the age 16 to 24 population has moved into school enrollment categories that tend to have lower LFPRs relative to others, putting downward pressure on the overall LFPR for this age group.
  
Other Factors Likely Behind the Decline in Youth Workforce Participation

Along with increasing school enrollment, people between the ages of 16 to 24 years are less likely to either have a job or seek one while enrolled in school today. There has been a general decline in the LFPR within each school enrollment category over the last couple of decades. The LFPR for youth and young adults enrolled in school has declined by nearly 14.0 percentage points from a peak of 49.9 percent in 1994 to 36.0 percent in 2017. In contrast, the LFPR for younger people not enrolled in school has declined by approximately 2.0 percentage points during the same period, not nearly as dramatic of a decline (see Graph 3). Reports have noted an increased emphasis on school related activities, such as time spent on studies, volunteering, and sports. Greater involvement in these activities cuts into time available for other activities such as work or leisure. Part of the reason for the decline in the LFPR for those enrolled in school today is likely related to more time involved in school related activities.

Another general influence on workforce participation is the economy. In general, young people face a tougher job market than older age groups if they opt to seek work. The unemployment rate for Oregon’s youth (ages 16 to 19 years) was 9.5 percent in 2017, and 7.6 percent for young adults (ages 20 to 24 years). These unemployment rates are much higher than the unemployment rate for those ages 25 years and over, which was 3.5 percent in 2017. Further, unemployment rates for younger people are much higher during recessions and periods of slower job growth. The effect of job market conditions on youth and young adults’ workforce participation is mixed in with many other factors, such as the increasing rates of school enrollment discussed in the previous section, making it difficult to quantify the exact effect on LFPRs. Despite the difficulties in quantifying the effects, the economy appears to have some influence; this may explain some of the uptick in the LFPRs in 2016 and 2017 from historical low levels.

Conclusion

People 16 to 24 years of age are delaying entry into the labor force to a greater extent than in the past due to increased participation in school-related activities, lowering labor force participation rates for this age group and by extension the overall LFPR. Oregon’s total LFPR for ages 16 years and over peaked in the late nineties and has since fallen to historical low levels. A rough estimate puts about one-quarter of the decline in Oregon’s total LFPR since 2000 as attributable to the lower LFPR for people ages 16 to 24 years. The remaining three-quarters of the decline can be largely attributed to another demographic change – the oldest members of the baby boom generation reaching retirement age – and to a smaller degree the effects from the business cycle.   

Technical note: The source of the data presented in this article is the Current Population Survey (CPS). Due to sample sizes, there are more reliable data on the detailed component groups of the population available for the nation than for Oregon. Therefore, some sections focused on Oregon and some on national data, depending on the availability of reliable data for the analysis. As overall trends in youth workforce participation are similar for Oregon and the U.S., the U.S. detailed data provide insight into movements in Oregon’s trends.

 


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