Spokane Community Indicators e-Newsletter

COUNTY LABOR FORCE BACK TO PRE-GREAT RECESSION NUMBERS -

The size of the civilian labor force and the civilian labor force participation rate are two key measures of the labor market. For government, they speak to their success in encouraging entry into the labor market. For local recruitment efforts, the depth of the labor pool can be promoted to outside businesses. For the private sector, they signify the ability of an area to support a growing economic base through wages and salaries. For both government and the private sector, they can provide a deeper look into the standard employment rate of an area and the overall workforce capacity of a local economy.

The Civilian Labor Force Participation Rate is calculated by dividing the total number of employed people by the total number of people in the Civilian Labor Force. The Civilian Labor Force includes all people ages 16 and older who are eligible to work legally in the U.S. regardless of actual their employment status. To be included, people must be either employed or unemployed but actively seeking work. People not included are: the unemployed not actively seeking work; members of the Armed Services; and those living in mental hospitals, nursing homes, and prisons.

Considering what a civilian labor force means to business expansion and relocation, let's examine Amazon's search for their second headquarters, or what they call HQ2. Amazon stipulates HQ2 will "create 50,000 high-paying jobs" with construction and operations creating "tens of thousands of additional jobs".

While it's probably true most places in the U.S. would love to land Amazon's HQ2, the reality is few places in the U.S., including Spokane County, can meet the projected labor needs or have the current infrastructure Amazon wants, like a mass transit system. Yet, the area certainly has enough capacity to support the new fulfillment center Amazon is currently building that will create as many as 1,800 new jobs. This one event will mark the largest single-firm addition of employees in many years.

Mark Mattke, Chief Executive Officer with the Spokane Workforce Council, said it is important for relocating and expanding businesses to know a prospective area has "ongoing access to a strong talent pipeline that meets their current needs and will also sustain business growth into the future as retirements and other factors impact their workforce."

Doug Tweedy, Regional Economist with the State of Washington Employment Security Department, said "The Civilian Labor Force is a top consideration when a business is planning to relocate or expand

into a new location. Typically when relocation or expansion occurs, a business is moving from an urban center experiencing a labor shortage."

Grant D. Forsyth, Ph.D., Chief Economist with Avista Corp, said the size of the Civilian Labor Force is crucial to a local economy. "In the long run, Gross Domestic Product growth (regional or national) is the sum of productivity growth and labor force growth", said Forsyth.

Looking at the Civilian Labor Force and Participation Rate indicator on the Trends website, we see that at 240,421 during 2017, the Civilian Labor Force in Spokane County was the highest in the series. 2017 also exceeded the previous high mark of 238,310 that occurred in 2008, and but was then followed by six consecutive years of annual decreases.

The participation rate has decreased over the series, with the gap between the county and state widening overall since 2008. During 2008, the participation rate in the county was 65.4% compared to 66.5% in the state. By 2017, both the county and state experienced decreases to 59.0% and 63.7% respectively.

The participation rate has declined over the past two decades for many reasons. The most significant is tied to the retirements of the Baby Boomers, but other factors include physical disabilities and poor preparation for the labor market. Still, it is unclear why the participation rate in the County has declined faster than that the state overall. The share of the 65+ population, a group that is ostensibly retired, is only slightly higher than that of Washington State.

For sure, labor force growth can be affected by the overall health of the working age population. "We have a well-documented opioid and obesity crisis in the U.S., negatively impacting the ability of people to work", said Forsythe.

In fact, Census data for the interval 2011-2016 reveal that the County's disability rate was 18%, while the State of Washington average was 15%.

If the long-term decline in the participation rate continues, then our regional economy may not be able to yield a deep enough labor pool to either attract businesses or facilitate growth of already established ones. In some Washington counties, the participation rate has fallen below 50%, making it difficult to grow very fast. Yet, in other counties, particularly in the Columbia Basin, the participation rate is over 70%.

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