Measuring Labor Force Participation


by Rachel Vilsack —

Minnesota’s high labor force participation – or the percent of the population working or looking for a job – is a key factor in future job growth. It’s also a measure of worker availability, which can fluctuate as youth enter the labor force for the first time, job seekers stop looking for work, or workers retire and exit the labor market entirely.  In December 2013, the state’s labor force participation rate stood at 70.1 percent.

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Between 2009 and 2012, the number of retired individuals drawing social security beneftis in Minnesota increased by just over 58,000. This is an exodus from the workforce that would account for a little more than a two percentage point drop in our labor force participate rate. Over that same period, our labor force participation rate declined by 1.4 percentage points.

If baby boomers retire at current rates, an estimated 215,540 will leave the labor force by 2017. Because they make up a large share of the population, Minnesota’s labor force participation rate will decline 1.6 percent. Minnesota’s labor force will expand by only 52,880 as younger people age out of school and enter the workforce.

If half of baby boomers delay retirement five years, then 124,650 will leave the labor force by 2017, and the labor force participation rate will increase 0.9 percent.

The take away: the effects of youth and in-migration are eclipsed by baby boomer behavior.

Check out the State Demographic Center’s new report In the Shadow of the Boomers: Minnesota’s Labor Force Outlook for more information.

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