Leaving the labor market

September 2, 2012
   
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Ohio’s labor market continues to struggle more than four years after the start of the recession that started in December 2007 and ended in June 2009.  Over the course of that recession and the slow recovery, Ohioans continued to leave the labor force – more than 182,000 Ohioans have left the labor market since the recession began. In 2011, only 64.1 percent of Ohioans were in the labor force, lower than at any point since 1985.  When people leave the labor force they are no longer considered unemployed and no longer counted in the unemployment rate, even though they might still want to be working. This more than 25-year low in labor force participation reflects a lack of confidence in the labor market – a sign that people have become discouraged and stopped looking for work. Similarly, the employment-to-population ratio measures the percent of the working-age (over 16) population that is employed. This measure is also at a 26-year low and has been in somewhat of a free-fall since the start of the 2007-09 recession.

It can be surprising to remember how low women’s labor force participation was just a generation ago. Less than half of women over 16 were in the labor force in 1979 when many of our charts start – this proportion rose steadily over the next 30 years, suffering only occasional one-year declines, even in the deep recession of the early 1980s. Female labor force participation has now fallen for four years running in Ohio and is at only 58.6 percent, lower than at any point since 1995. Male labor force participation has been declining since 1979 but the drop has been much steeper in the last four years. The indicator is now at an all-time low of 69.9 percent, down ten percentage points since 1979.

The male employment-to-population ratio rose last year for the first time since 2007. It is now 63.4 percent, down from 75.7 percent in 1979. Women’s employment-to-population ratio fell again last year to 54 percent, down from a high of 58.6 percent in 2008.

The employment-to-population ratio has been declining for both black and white workers, a problematic trend. However, the employment level of black workers last year was at an alarming low of just 48.6 percent, lower than at any point since 1983. This is deeply troubling and a sign that Ohio has a long way to go before the labor market facing the black community can be considered healthy.

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