Labor Force Participation Stabilizing Nationally with Significant Local Variation

Categories: Commentary |

June 8, 2015

This week we survey Labor Force Participation at the national, State and county levels.

May Employment Strong, LPFR Appears to be Stabilizing

 Last Friday’s job report provided good news for the health of the U.S. labor markets.

The labor force participation rate was essentially unchanged from April to May at 62.9%.

This ratio had declined steadily since its peak in January ’07 until June ’14 and has been stable since then.

The long period of decline has been attributed to both structural factors (aging of the population) and cyclical factors (discouraged workers).

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As with most economic indicators, drilling down to the State level shows substantial variation across the country.

The participation rate in Maine and West Virginia declined by over 1% between April ’14 and April ’15.  Illinois’ participation rate declined by -.4%, from 66.3% to 65.9%.

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Drilling down still further to the county level.  We see still more variation in the size of the labor force.

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Source: BLS, DIVER Analytics-Map Module

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The counties with the largest increase in labor force for the last year include a number of oil patch names:  Beckham, OK (+11.6%), Calcasieu, LA (+10.4%), Woodward, OK (+9.9%), and Stark, ND (+8.8%).

Coal country is heavily represented in the list of counties with shrinking labor forces:  Henry, VA (-4.8%), Wise, VA (-4.7%), Whitley, KY (-4.6%), and Pike, KY (-4.6%).

Labor force, together with the number of employed, weekly wages and the unemployment rate is a key indicator of labor market health.

We recently added to our DIVER Filter Tool a predefined Filter designed to highlight counties with labor markets that are weakening, and creating potential credit risk for portfolio holdings.  The Filter screens for counties with declining values in the key indicators of labor market health.

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There are currently 20 different counties, which show as high-risk according to the Lumesis-Employment Risk Filter.  Users of DIVER Analytics can screen their portfolio holdings to identify exposure to these counties.


Have a great week,


Michael Craft, CFA


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