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Have you ever wondered why the unemployment rate is at historic lows but firms are struggling to hire workers? Why is there a scarcity of workers causing delays in getting service and reduced business hours?
The answers lie in the labor force participation rate. In general, the labor force participation rate is the proportion of the working-age population that is either working or actively looking for work. The specific definition is the percentage of the civilian noninstitutional population 16 years and older that is working or actively looking for work.
The labor force participation rate is published by the Bureau of Labor Statistics (BLS) on a monthly basis. It is used as an initial indicator of current labor market trends as well as a gauge of the overall health of the economy.
The rate has sharply declined since 2009, when it was more than 65 percent. That is, 65 percent of the labor force had a job or were actively seeking one. Since February 2015, the figure has been below 63 percent, reaching a low 60.1 percent during the pandemic.
In short, Americans are quitting work at record rates. A report from the U.S. Chamber of Commerce reveals that there are more than 10 million job openings in the country — but only 5.7 million unemployed workers.
A BLS study concluded that people have a reduced willingness to work that has kept labor force participation down. A recent article by this writer underscored the findings, noting one reason people are not working boils down to simple economics. Many can earn more disposable income by not working.
A recent report by personal finance website wallethub.com, “States Where Employers Are Struggling the Most in Hiring,” provided states where employers are struggling the most in hiring. Wallethub.com presented a comparison of the 50 states and the District of Columbia based on the rate of job openings.
During the past year, the state straining the most to hire workers was Alaska. The other states in the top 10 are West Virginia, Louisiana, Montana, Iowa, South Carolina, New Mexico, Virginia, Tennessee, and North Dakota.
The state having the least problem in hiring was New York. It was followed by New Jersey, Connecticut, Washington, Hawaii, Florida, the District of Columbia, Utah, Indiana and Kansas.
Alabama came in at 24th on the list.
What can be done to motivate people to work? That is a subject for another day. Stay tuned!
Wayne Curtis, former superintendent of Alabama banks, is a retired Troy University business school dean. Email him at wccurtis39 @gmail.com.
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