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United States Workforce

A look at industry, unemployment, and labor force participation.

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Many media outlets have called attention to the shrinking middle class, increasing income inequality, shrinking union membership, and how a college degree doesn't prepare people for the labor market these days. The minimum wage debate and the erosion of a social safety net have become heavily partisan issues.

In the midst of these daily headlines and debates, it's important to take an objective look at the current state of industry, unemployment, and labor force participation. 

Industry

The industry is the primary activity that a firm or organization is involved in, not the occupation that all workers have. 

For example, big construction firms employ lawyers, project managers, accountants, admin. assistants, and IT workers, all of whom work in the construction industry. Similarly, a pharmacist working at CVS works in the retail trade industry because that's the primary activity of CVS.


Health Care/Social Services was the most common predominant industry at the county level in 2016, however the predominance is often not very strong.  This sector includes a broad range of establishments from doctors'/dentists' offices, to major hospitals, to home health care, to nursing and residential care facilities, to social assistance organizations such as shelters and food banks.

Manufacturing includes a wide mix of everything from aerospace manufacturing in Box Elder County, UT to the Michelin tire company headquarters in Greenville County, SC to medical devices such as catheters in Randolph County, NC.

Agriculture/Forestry/Fishing & Hunting is the predominant industry in the California Central Valley, many small counties in the Great Plains region, and a few counties in Florida and the Pacific Northwest.

Retail Trade is being far and a way the most predominant industry in Benton County, AR, as it is home to Walmart headquarters. Retail is also the most predominant industry in Cheyenne County, NE - home to Cabela's headquarters.

Educational Services, and to a lesser degree, Public Administration tend to be the predominant industries in state capital cities. Educational Services also shows up in counties containing college towns such as Story County, IA (home of Iowa State) and Washtenaw County, MI (home of U. of Michigan in the city of Ann Arbor).

Accommodation/Food Services shows up as the predominant industry in high-tourism areas such as many counties in Hawaii, Teton County, WY (home to the mountain resort town Jackson Hole), and Clark County, NV (home to Las Vegas). This industry includes a variety of business establishments including bars and restaurants, convention centers, travel agencies, and hotels.

Mining/Quarrying/Oil & Gas Extraction is the most predominant industry in Texas' Permian Basin (home to Midland and Odessa), in Williams County, ND, and in North Slope, a census area in Alaska.

Construction shows up as the most predominant industry in parts of Utah and Colorado, however predominance is not very strong.

Professional and Technical Services is the most predominant industry in Santa Clara County, CA (home to the city of San Jose), Boulder County, CO, Los Alamos County, NM, and Madison County, AL (home to the city of Huntsville).  Professional and Technical Services is also very strongly predominant in many counties in the Greater Washington DC area.

Some "Other" industries that were not predominant in enough counties to make it on to the top 10 list are Arts/Entertainment/Recreation, Finance and Insurance, and Wholesale Trade.

Unemployment

Just as predominant industry varies geographically, so too does unemployment. Unemployment nation-wide was approximately 4.9 percent in 2016, but counties in green had lower unemployment than the national rate, and counties in red had higher unemployment. Size of the point denotes the size of the unemployed population. People who are unemployed are actively looking for a job.

Unemployment rates vary by industry as well as by location, as some industries are more heavily tied to the business cycle than others (e.g. construction and retail are highly cyclical compared to education). There's also the increased use of contract/temporary workers, which has affected some industries more than others. 

Unemployment also varies by demographics, most notably by age, sex, race/ethnicity, and level of education. The unemployment rate only includes those actively looking for work, and therefore does not include those not in the labor force. Only about 62.8 percent of adults were participating in the labor force in 2016(**), which means that 37.2 percent were not.

Labor Supply & Labor Force Participation

According to the Current Population Survey, almost 98 million people ages 16+ were Not In the Labor Force (NILF) in 2016, that is people not currently working and not looking for work. Traditionally, these people are homemakers, retirees, students, or people with disabilities. 

Another group of people not in the labor force is "discouraged workers," those who were unemployed for a long time, searching for work yet not finding anything, so they have stopped looking. Often these are low-skilled workers, possibly with felony convictions or other large barriers to employment. After an unfruitful job search, they decide they're better off staying at home, going back to school, or applying for disability benefits. Discouraged workers are hard to measure because they can show up in labor statistics as students or disability benefits recipients. 

On the other hand, many companies - particularly highly technical companies - have expressed a hard time hiring and finding qualified candidates, a phenomenon known as "the skills gap."  

At the national level, overall labor force participation has declined over the decades, even as women (including mothers with young children) have increased their labor force attachment. Only approximately 62.8 percent of people ages 16+ were participating in the labor force in 2016, compared to about 67.0 percent in 2000(**). While the biggest driver of this is baby boomers aging out of the workforce, that is not the whole story. Even among "prime-working-age men" (men ages 25 - 54), labor supply has been decreasing. Compared to other developed countries, the US ranks very low for its labor force participation rate, even though we have a relatively young population and an increasing group older than 65 are continuing to work rather than retire.

There are large regional differences in labor force participation. The map below shows those not in the labor force by county. Green means the county had a lower NILF rate than the 2016 national average of 37.2 percent, and purple means the county had an above-average NILF rate. Size of the point denotes the size of the NILF population. 

Full-Time vs. Part-Time Workers

The labor force participation rate does not distinguish between those working full-time or part-time, defined as fewer than 35 hours a week. There are many who currently work part-time involuntarily. These "underemployed" people want to work full-time but are not given the extra hours by their employer, often not because of a shortage of work to be done, but because the employer would then need to provide benefits. Much of the "job restructuring" that went on during the Great Recession replaced one full-time worker with two (or more) part-time workers as a cost-savings measure. 

Conversely, others who currently work full-time would actually like to decrease their hours but can't. "Good" part-time jobs are few and far between. Part-time jobs are often not "career-track" so one's skills won't be used to their fullest potential, and usually come with a significant decrease in benefits (if they come with benefits at all).     

Informal Work

Lots of people work informal jobs that escape official labor force statistics! "Informal" does not mean "illegal" necessarily, it simply means "not captured by payroll data." Some examples of legal informal work are baby sitting, math tutoring, and selling cold water on a hot day. The general image that comes to mind is that they are supplemental jobs (sometimes referred to as "side hustles"), or that they are jobs taken by those marginally attached to the workforce (a 16-year-old baby-sitter, e.g.). While this image is true for some, there is a large amount of people who make their living in the informal labor force out of necessity. 

Not surprisingly, informal work is hard to measure due to its "off the books" nature. While the official statistics presented here allow us to make geographic comparisons, they are only an approximation of the true labor force in the United States.

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