Oregon’s middle-age worker job crunch

By Josh Lehner
Oregon Office of Economic Analysis Blog

There is a three stage process for the labor market to return to normal, or at least normal dynamics. First jobs become more plentiful, then wages start to rise, and third individuals begin searching for jobs at higher rates. As such, Oregon’s labor force participation rate has increased from its recessionary lows reached in 2012 and 2013. While the majority of the decline in participation over the past 15 years is demographic – the aging Baby Boomers are entering their retirement years – some of the decline is due to the lackluster economy in recent years. Along with an improving economy will come labor force gains and some participation increases.

Even as participation rates and employment opportunities are rising, these gains are not evenly distributed across the economy or individuals. In fact, there are stark differences across generations and their labor market outcomes today.

The employment-population ratio, EPOP for short, measures the share of individuals for a certain age group that has a job. Those in their mid-20s through mid-30s have fully recovered in terms of their employment rate. That is, the share of 25-34 year olds with a job today is the same as back in 2007, prior to the start of the Great Recession.

Middle-age workers, however, have considerably lower employment rates today. This is certainly a cause for concern. To the extent that these lower employment rates reflect the impact of long-term unemployment, or industrial or geographic mismatches, these losses may be permanent, thus lowering the productive capacity of the regional economy. Middle-age individuals have seen a decline in their participation rates, and a corresponding increase in discouraged workers, those saying they are injured, disabled and/or ill and also an increase in retirements. The latter two of these reasons for not being in the labor force possibly point toward a more permanent decline than other reasons given, such as enrolling in college, staying at home to take care of children and the like. The former reason indicates that in a stronger economy — which we are getting to — such individuals are more likely to return to the labor market.

Finally, older individuals are working at higher rates than seen in the recent past. The share of Oregonians 60 years and older with a job is higher today than in 2007, or even back in 2000. This likely reflects two important trends. The first is the overall shift in the type of jobs in the economy today. There is considerably more office and office-type work today than in previous generations, thus making it physically easier to work longer. The second trend is less benign. Some individuals are working later in life for financial reasons such as inadequate savings or retirement accounts.

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