Raising Local Labor Force Participation
Date Posted: June 22, 2023
Posted In: Ideas, Workforce,
From Area Development: Businesses across the country, in communities large and small, have been challenged to find workers since well before the pandemic. As of November 2022, there were about four million more job openings than available workers, equal to about 1.7 open positions for every person looking for a job.
To help employers with the ongoing labor shortage, economic development organizations (EDOs) are creating strategies to expand the pool of workers in their communities. One common approach is to boost local labor force participation by removing obstacles for people who want to work but face constraints. The latest report from the International Economic Development Council, “Growing Your Workforce: Strategies to Raise Local Labor Force Participation,” explores how EDOs are tackling labor force barriers such as the lack of childcare, transportation, justice involvement, the benefits cliff, and others so that more people can participate in the economy.
Understanding the Labor Force Participation Rate
Labor force participation is important because it measures the percentage of the working-age population (ages 16-plus) that is either employed or looking for work. Many people who are out of the labor force are there by choice — they are retired, ill, or otherwise choose not to work for pay outside the home. However, many others would like to work but face challenges such as employer bias or logistical barriers and would participate with the right accommodations.
Nationally, the labor force participation rate peaked in 2000 at 67.3 percent, declining since then to 62.3 percent. (Labor force participation is not homogeneous across the country, but varies significantly by geography and demographic group.) Many social, demographic, and economic trends have contributed to the declining rate, including slower population growth, the aging of the baby-boomer generation, and economic shocks such as the Great Recession and the Covid-19 pandemic.
Unfortunately, the future doesn’t look brighter: the Bureau of Labor Statistics projects that labor force participation will drop further through 2029, to 61.2 percent. To counteract the decline, EDOs, businesses ,and communities must be intentional about understanding labor force participation trends and developing strategies to ensure that they aren’t leaving potential local workers on the sidelines.