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5th District Footprint provides a spatial analysis of data relevant to community development in the Fifth District. The publication is available online quarterly.

5th District Footprint

October 2015

5th District Footprint October 2015

This issue of 5th District Footprint examines labor force participation (LFP) rates in the Fifth District before and after the Great Recession. 

Labor Force Participation in the Fifth District

Labor Force Participation Rate (2007)

Source: U.S. Census Bureau, 2005-2007 American Community Survey 3 Year Estimates

This issue of 5th District Footprint examines labor force participation (LFP) rates in the Fifth District before and after the Great Recession. The LFP rate is the share of the civilian population above the age of 16 that is in the labor force. Individuals are considered to be in the labor force if they are currently employed, or are unemployed but actively searching for a job. In the United States, the LFP rate has been declining for more than a decade due to long-term demographic trends, structural changes in LFP preferences and short-term economic conditions.1

Over the past decade, members of the Baby Boom generation have been retiring, resulting in an increasing percentage of people leaving the workforce.2 Simultaneously, an increasing number of young adults are pursuing degrees in higher education, thus delaying their workforce entry. Meanwhile, a larger percentage of teenagers above the age of 16 are choosing not to participate in the workforce, and a larger percentage of workers are leaving the workforce due to disability.3 The collective effect of these demographic and structural trends is a long-run decline in the LFP rate.

In the short-run, economic conditions such as the Great Recession also may affect the LFP rate.4 For instance, a high rate of unemployment and slow job market recovery may result in “discouraged workers” who decide to cease actively searching for jobs, thus exiting the labor force.5 

The U.S. Census Bureau’s American Community Survey 3-year estimates for 2005–2007 and 2011–2013 illustrate the net effects of long-run and short-run factors on the LFP rate pre- and post-recession. In 2007, the national LFP rate was 64.7 percent, which fell to 63.8 percent in 2013.6 

Labor Force Participation Rate (2013)

Source: U.S. Census Bureau, 2011-2013 American Community Survey 3-Year Estimates

Within the Fifth District, LFP rates declined in West Virginia, Virginia, North Carolina and South Carolina from 2007 to 2013, but stayed flat in Maryland and increased in the District of Columbia.7  Relative to the other Fifth District states in 2007 and 2013, Maryland had the highest LFP rates (68.7 percent and 68.8 percent, respectively), while West Virginia had the lowest LFP rates (55.3 percent and 54.4 percent, respectively).8  

Of the 250 Fifth District counties for which 2007 and 2013 estimates are available, 73.2 percent had an LFP rate decline, 9.2 percent had no change and 17.6 percent had an increase.9 Pre-recession LFP rates range from 33.2 percent (McDowell County, West Virginia) to 77.1 percent (Loudoun County, Virginia).10 McDowell County, West Virginia, continued to have the lowest LFP rate in the District in 2013 (32.2 percent), while Alexandria, Virginia, claimed the highest LFP rate (78.7 percent).11 Alexandria is part of a cluster of localities in the Washington, D.C., metropolitan statistical area that maintained LFP rates above 70.1 percent from 2007 to 2013.12 

The two Fifth District counties with the largest declines in LFP rate were the western-most counties in Virginia and North Carolina. Lee County, Virginia, experienced an 11.9 percentage point decline to 42.3 percent, while Cherokee County, North Carolina, experienced a 14.0 percentage point decline to 43.7 percent.13  

Increases in the LFP rate did occur in select Fifth District counties, although these increases were generally of a smaller magnitude than LFP rate declines faced in other counties. The largest LFP rate increases were a 9.3 percentage point increase to 66.9 percent in Fredericksburg, Virginia, and a 6.2 percentage point increase to 45.1 percent in Mingo County, West Virginia.14


 
1

Federal Reserve Bank of Chicago (2012), “Explaining the decline in the U.S. labor force participation rate.”


2

The Baby Boom generation consists of individuals born from 1946 to 1964.

3

Federal Reserve Bank of Philadelphia (2014), “On the Causes of Declines in the Labor Force Participation Rate.”

4

Ibid.

5

Ibid.

6

Estimates of LFP rates may vary by data source; U.S. Census Bureau, 2005–2007 American Community Survey 3-Year Estimates; U.S. Census Bureau, 2011–2013 American Community Survey 3-Year Estimates.

7

Ibid.

8

Ibid.

9

Ibid.

10

U.S. Census Bureau, 2005–2007 American Community Survey 3-Year Estimates

11

U.S. Census Bureau, 2011–2013 American Community Survey 3-Year Estimates.

12

Ibid; U.S. Census Bureau, 2005–2007 American Community Survey 3-Year Estimates.

13

Ibid.

14

Ibid.

Additional Resources

Canon, Maria E., Marianna Kudlyak, Guannan Luo and Marisa Reed, “Flows To and From Working Part Time for Economic Reasons and the Labor Market Aggregates During and After the 2007-09 Recession,” Federal Reserve Bank of Richmond Economic Quarterly, Second Quarter 2014, vol. 100, no. 2, pp. 87-111.

Hornstein, Andreas, Marianna Kudlyak, and Fabian Lange, "A New Measure of Resource Utilization in the Labor Market ," Federal Reserve Bank of Richmond, mimeo, April 2014.

Hornstein, Andreas and Karl Rhodes, “Will a Surge in Labor Force Participation Impede Unemployment Rate Improvement?,” Federal Reserve Bank of Richmond Economic Brief, August 2013, No. 13-08.

Kudlyak, Marianna and David A. Price, “The Increased Role of Flows Between Nonparticipation and Unemployment During the Great Recession and Recovery,” Federal Reserve Bank of Richmond Economic Brief, June 2012, No. 12-06.

Romero, Jessie, “Where Have All the Workers Gone?,” Federal Reserve Bank of Richmond Econ Focus, Second/Third Quarter 2012, pp. 12-16.

Waddell, Sonya Ravindranath, “State Labor Markets: What Can Data Tell (or Not Tell) Us?” Federal Reserve Bank of Richmond Econ Focus, First Quarter 2015, pp. 36-39.

Weinberg, John A, “The Long View of the Labor Market,” Federal Reserve Bank of Richmond Econ Focus, Third Quarter 2014, pp. 36.

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