PUBLISHED: “How to Raise Labor Force Participation in Oklahoma” for OCPA (Oklahoma Council of Public Affairs)

I have a new publication out for the Oklahoma Council of Public Affairs (OCPA), titled “How to Increase Labor Force Participation in Oklahoma.” Excerpt below:

Oklahoma’s labor force participation rate sits at 60.5 percent as of August 2016. By way of comparison, the overall U.S. labor force participation rate is 62.9 percent, while the median labor force participation rate among states is 63.5 percent.

Both in Oklahoma and nationally, the labor force participation rate has modestly improved since a steep decline caused by the Great Recession, but that recovery from a cyclical decline has likely peaked. That leaves a much larger, persistent decade-and-a-half structural decline—structural defined as economic effects driven by deep economic fundamentals and not those driven by temporary, business-cycle factors.

This is a grave problem necessitating public policy reform on multiple fronts.

The labor force participation (LFP) rate measures the percent of the adult, civilian, non-institutional population that is either employed or is unemployed and actively looking for work. Thus, those in college, those retired, and those otherwise not looking for work—those perhaps discouraged from a fruitless job search or those on social assistance, for example—comprise the cohort not in the labor force.

LFP has a crucial bearing on economic health. This understanding can be traced all the way back to Adam Smith, who noted that “specialization is limited to the extent of the market,” i.e., to the number of workers contributing to the capitalist engine of production, which is a key driver of growing production. A society can only consume what it produces; thus more citizens contributing to productive endeavors allows us all to consume more products, better products, and lower-priced products.

Looking at annual LFP in Oklahoma over time, we can see in the nearby graphic a precipitous decline over the last decade and a half, with LFP dropping from 64.6 percent in 2002 to 61.9 percent in 2015. Returning to an LFP of 64.0 percent would mean adding 105,341 individuals to the labor force.

—Read “How to Increase Labor Force Participation in Oklahoma” at the Oklahoma Council of Public Affairs.

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