Civilian Labor Force Growing Despite Advancing Technology

By Dr. Patrick Jones

Despite computers and sophisticated machinery, an economy still runs on the quantity and quality of its people. The long-term displacement of certain jobs by machines or in this era, artificial intelligence, is still occurring. But we need only look to the current national unemployment rate to realize that labor is still in demand. Labor quality is a difficult concept to measure, although least some indirect signals can be gleaned, such as skills in greatest demand or occupations in demand.

This post will look at the other dimension -- the size of the workforce in the greater Tri Cities and its current adequacy and the path over the most recent years. If job growth opportunities arise, either through the growth of existing firms or the entrants of new firms in the local economy, enough workers need to be available. To assess that question, we first need to know how willing residents are to be a part of the workforce.

First, let’s consider how large is the workforce in the greater Tri Cities? According to indicator 3.3.1, Total Civilian Labor Force and Participation Rate, it consisted of more than 140,000 in 2018. The measure is made up of two parts, those working and those not working but looking for employment. So the measure doesn’t count those who have retired or dropped out of the workforce. The latter group is often referred to as “discouraged workers.”

As this indicator displays via the bars, the workforce has risen by 12,000 since 2014, fairly dramatic turn. That’s about a 10% cumulative increase in four years. Over the same period, population in Benton and Franklin Counties has climbed by a cumulative 6% rate. Relative then to the total population, the workforce has grown faster.

Still, it’s worthwhile noting that it wasn’t until 2016 that the workforce of the greater Tri Cities re-attained the size it had held in 2011. This is a unique result for eastern Washington. As many readers know, the Great Recession came a couple years later to the area than elsewhere, due to the federal stimulus dollars that flowed to the area 2009 through 2011.

The workforce of any economy is a combination of the size of the adult population, modified by the willingness and ability of that population to engage in work. The civilian labor force defines the adult population as anyone over the age of 16. When expressed as a ratio of the workforce to the adult population, the concept becomes the participation rate. Labor economists pay close attention to this rate, as it measures the ability of the economy to grow. In the face of a low participation rate, firms may not be able to expand without attracting workers beyond the local economy; in the face of a high participation rate, recruitment of workers should be much easier.

Over the past couple of decades, the U.S. participation rate has dropped significantly. For a look at the decline over the last 20 years, consider this graph from the U.S. Bureau of Labor Statistics (BLS). It shows a drop over 5 percentage points, with drop that especially pronounced after the Great Recession.

Much of the drop is attributed to demographics, as the boomer generation has begun to “age out” of the workforce. Its place has not been taken up completely by subsequent generations.

Another factor behind the long-term drop in the national participation rate is the role of women in the workforce. Generally, women are engaged in the formal workforce at considerably lower rates than men. The BLS reports that as of 2018, a 12 percentage point difference characterized the difference, 69.1 vs. 57.1%. While the share of women active in the workforce peaked in the 1980s, the last 20 years have shown a slight decline, as seen here.

Traditionally, women have engaged in the workforce in smaller numbers than men due to their preponderant role in child-rearing and to the mix of jobs in the economy. Yet, household duties are increasingly shared by men while the economy continues on its shift away from brawn to brain power. Additionally, women make now make up the majority of college graduates. These and other factors have made for a smaller percentage drop of the female participation rate than that of men, but a drop nonetheless.

Another factor may lie in the slight rise of the disabled population. Nationally, the estimated rate has climbed from 12.1% in 2008 to 12.6% of the total population 2018. Although progress have been made in finding jobs for this large population, many, unfortunately, do not enjoy a job.

How has workforce participation evolved in the greater Tri Cities? As indicator 3.3.1 displays, it, too, has declined, from 71% to 65% in 2018. Yet for much of the period, the adult population has shown a greater engagement with labor market than the state as whole, until 2014. Since then, the Tri City workforce has experienced about the same participation rates as those of the state. Still, it’s worth noting the rates in the two counties and the state currently exceed that of the U.S. by a couple of percentage points.

What might the workforce of the greater Tri Cities look like in the near to intermediate term? First, to the size of the population, the demographers the Office of Financial Management are projecting the head count of the two counties to gain nearly 35,000 by 2025. The majority of these new residents will be 16 or older. Second, many of the current number of residents will enter the category of 16+. As  indicator 0.1.4 lays out the disproportionately large numbers of the young of the Tri Cities. The age group 0-17 claimed 28% of the population versus 22% for the state. The group 65+ claimed a little less than 14% of the population in 2018. Some of these are still working but will not be by 2025. Yet, it is likely that the numbers finally leaving their working years behind will be outnumbered by the number of the young entering the labor market.

It is highly likely that the participation rate of the greater Tri Cities will not fall any further, and in fact, might increase. With an adequate workforce numbers in the near-term, it appears that the challenge for the local economy will be a match between skills demanded and the skills claimed by those looking for work.