The latest U.S. job report shows the official national unemployment rate dropping below 6 percent for the first time since before the recession. This seemingly good news, however, is tempered by a continued drop in the labor force participation rate (LFPR).
The LFPR dropped from 62.8 to 62.7 percent in September – the lowest point in 37 years. The LFPR measures the share of working-age, noninstitutionalized Americans who are currently employed or actively seeking work. Those people who are in the military, in mental hospitals, prisons and similar circumstances are considered as institutionalized and not included in this measurement.
In short, the LFPR measures the percentage of available civilians working or interested in work.
The national LFPR has been in steady decline since 2001, dropping from a high of 66.8 percent that year to the current 62.7 percent. North Carolina has been no exception to that trend.
Indeed, the Tar Heel State’s LFPR has fallen more rapidly than the nation’s. In 2001, North Carolina’s LFPR was 68.1 percent, 23rd highest among all states. That rate fell to 61.6 percent in 2013, which places NC as 36th highest, a drop of 13 slots, according to analysis from the Liberty Foundation.
The nation continues to suffer from the effects of the current prolonged recession. In spite of headline unemployment numbers improving, the labor force participation rate has dropped to its lowest point in nearly four decades. That’s an unemployment problem that often doesn’t make the news.
North Carolina is no exception. Indeed, anti-growth policies such as high taxes and stifling regulations enacted during the first decade of the 2000s helped drop our LFPR at a faster pace than most other states in the nation.
Thankfully, last year’s historic tax reform created a far more competitive environment for investment and job growth. Here’s hoping additional positive reforms will be coming in future years to try to turn around long-term negative trends.