With the November elections fast approaching, incumbent Gov. Pat Quinn and Republican challenger Bruce Rauner are busy spinning unemployment data to their advantage. But by cherry-picking numbers, both candidates only paint a partial picture.Before delving into the labor force participation rate (LFPR) in Illinois and the Midwest, here’s the latest from the state’s job front–in case you missed it:
- July’s unemployment rate dropped to 6.8 percent–the largest over-the-year decrease since 1984.
- The unemployment rate was 9.2 percent in July 2013.
- Employers added 11,200 new private-sector jobs, or 10,300 total nonfarm jobs if government losses are included.
- According to preliminary BLS figures, 17,157 people left the workforce last month.
July’s job gains is definitely good news, but Rauner and other skeptics say Illinois’ falling unemployment rate is the result of a shrinking workforce and LFPR.
“Across the country, economists say, ‘labor force participation,’ as it’s called, has dropped sharply since the Great Recession of December 2007 to June 2009. About half of the decline nationally is due to the aging of the workforce. When workers enter their early 60s, they retire in droves,” according to the Chicago Tribune.
The national LFPR is currently 62.9 percent.
Check out the map below to see each Midwest state’s LFPR and July’s preliminary unemployment rates:
Illinois’ labor force participation rate dropped 2.2 percentage points over the past five years. While the rate briefly rose to 65.4 percent during February and March of 2014, it has decreased by 0.6 percentage points since last July.
Though Illinois employers added nearly 18,000 new jobs in the past four months, the LFPR declined simultaneously and the workforce lost 63,000 people, according to data from the Bureau of Labor Statistics (BLS).
The Chicago Tribune editorial board has more:
Perhaps most relevant to this summer’s political debate, though, Illinois is failing to create jobs for its dwindling workforce at the rate that it must before citizens can think of their jobs recovery as robust. Over the past year, Illinois boosted its job total — we’re talking about private-sector, nonfarm jobs — by a paltry 35,600, according to preliminary BLS figures. That was a tiny 0.6 percent increase in the overall number of jobs.
And, regrettably, that number is about the annual average for Illinois: Over the past five years, a net of just 156,900 jobs were created. Put another way: During five years when the number of U.S. jobs rose by 5.2 percent, the number of Illinois jobs rose by 2.8 percent. Big difference.
Capitol Fax’s Rich Miller cited an explanation by James Bullard, president and CEO of the Federal Reserve Bank of St. Louis for the diminishing LFPR:
If you know only one aspect of the data on labor force participation, it should be this: Labor force participation used to be relatively low, it rose during the 1970s, 1980s and 1990s, peaking in 2000, and it has generally been declining since 2000. [...]
Since 2000, the labor force participation rate has generally been declining. The pace of decline was particularly sharp during the recession of 2007 – 2009, but the participation rate also declined steadily in the early 2000s and since the end of the recession in mid – 2009. […]
According to BLS projections, more than 70 percent of this decline is due to pure demographic factors; that is, changes in population shares by age groups, assuming unchanged participation rates for each group.
The main factor behind the decline is the workforce has a rising share of older, baby-boomer workers due to improvements in life expectancy. This rising share reduces the overall LFPR since older workers participate at a lower rate than prime, working-age individuals, according to Willem Van Zandweghe, a senior economist at the Federal Reserve Bank of Kansas City.
“A second factor behind the gradual decline of the LFPR has been a steady reduction in labor force participation among young people over the last decade, resulting in large part from rising school enrollment,” wrote Zandweghe.
NEXT ARTICLE: Bruce Rauner cites new data to show Illinois leads the Midwest this year in job loss
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