The employment to population ratio (EPOP) is the share of the population that has a job. To me it has one big benefit: it cuts through the whole conversation about whether the unemployment rate is truly accurate or is lower due to all those individuals who gave up looking for work, etc. Additionally, by definition, it accounts for population growth, which is something that is very important in a small western state like Oregon that sees strong migration flows.
Of course this is not to say the conversation about the labor force participation rate isn’t important — it really is — but looking at these other measures does help shed some light on the state of the economy. There is no one metric to rule them all.
Much like the U.S. overall, Oregon’s total EPOP has been trending down for the past 15 years or so. Oregon’s underlying data is based on a relatively small sample and is thus more noisy than the U.S. but the trends are clear. One big difference in recent years is the fact that Oregon’s EPOP is lower than in the average state. Much of this weakness is among the older population groups (55+) which could be a bad thing (fewer job opportunities for older workers) and/or a neutral thing (migrating retirees weighing on the metric even if it’s not a fundamental economic issue) or potentially a noisy data thing. Regardless, Oregon’s overall EPOP is lower.
Given Oregon’s strong migration flows — both among the young and the retirees — focusing on just the so-called prime working age population is important. Here, Oregon’s patterns are nearly identical to the U.S. as a whole. There was about a five percentage point decline due to the Great Recession and so far the economy has recovered about 2 percentage points. In other words, this gauge of the labor market is just 40 percent recovered from pre-recession readings. As detailed previously, job growth is certainly strong enough to keep up with population growth and the influx of new workers, as such the EPOP for prime working age adults is increasing. However, there remains a long way to go to reach rates seen back during the mid-2000s. This is one reason in particular our office is more optimistic than most on the labor force participation rate, especially among this group (see here for a more detailed analysis). A stronger economy will pull workers back in.
To the extent that Oregon’s lower EPOP overall is due to demographics and retiree migrants (very likely) then it is much less a concern that Oregon ranks below the typical state. With the aging Baby Boomers, EPOP (along with participation rates) will continue to decline moving forward. This is why I prefer to look at the prime working age population and the trends within this group. With the large Millennial cohort mostly in their 20s, a stronger economy bodes well for both their near-term careers (finding a job) and longer-term careers (gaining experience and getting raises). This uptick in employed workers is good news for the economy, particularly among the youngest groups. As we will discuss later this week, some Millennials are even moving out of their parents’ basements and living on their own.