The US Participation Rate Is At A 35 Year Low: This Is How It Looks Broken Down By State

Tyler Durden's picture

After years of being roundly ignored by the mainstream media, and certainly by self-important economists, the issue of labor force participation is suddenly up front and center, especially now that the Fed itself finds itself scrambling to explain the humiliation of hitting its 6.5% unemployment "forward guidance" threshold without proceeding to tighten as it said it would initially when it launched QEternity in December 2012.

Incidentally, we predicted precisely this when we said in December 2012 that "using a simple forecast, based on LTM trends across all key employment metrics reveals something very troubling, for the Fed and stocks that is: the 6.5% unemployment rate will be breached in July 2013! Now granted that is simply idiotic, and there is no way that the US economy could possibly recover that fast, but that is precisely what is implied based on the ongoing collapse in the Labor Force Participation, and the concurrent plunge in the Labor Force Participation rate, which has been the biggest marginal driver for the unemployment rate, far more than the number of people who have jobs, or are unemployed (readers can recreate our calculation on their own in 10 minutes with excel)."

Granted, we were off by six months, but we were spot on about the reason why the unemployment threshold number was hit so quickly, instead of as the Fed has originally predicted, some time in 2015/2016.

So now that absolutely everyone is laser-focused more on the participation print, recently at 35 year lows, than the actual unemployment number which even the Fed has implied is meaningless in the current context, one thing to note is that while the overall number is a blended average across the US, it certainly differs on a state by state basis.

In order to get a sense of which states are the winners and losers in the payroll to participation ratio, we go to Gallup, which conveniently has broken down this number on a far more granular basis.

Gallup finds that Washington, D.C., had the highest Payroll to Population (P2P) rate in the country in 2013, at 55.7%. A cluster of states in the Northern Great Plains and Rocky Mountain regions -- North Dakota, Nebraska, Minnesota, Wyoming, Iowa, Colorado, and South Dakota -- all made the top 10. West Virginia (36.1%) had the lowest P2P rate of all the states.

As Gallup explains

Gallup's P2P metric tracks the percentage of the adult population aged 18 and older that is employed full time for an employer for at least 30 hours per week.  The differences in P2P rates across states may reflect several factors, including the overall employment situation and the population's demographic composition. States with large older and retired populations, for example, would have a lower percentage of adults working full time. West Virginia and Florida -- both in the bottom 10 -- have some of the largest proportions of older residents, with more than half of each state's adult residents older than 50 (52.9% and 51.5%, respectively), and both states rank in the bottom 10 states on the P2P index. Regardless of the underlying reason, however, the P2P index provides a good reflection of a state's economic vitality.

Of course, this now defunct demographic explanation does not account for the fact that within the US labor force, the number of people employed aged 55 and over has just hit a record high, as it defeats the demographic explanation. So while one should ignore the rationalization, one should certainly be aware of which states skew the participation distribution on the high and low side.

Mapped, the data looks as follows:

The natural derivative of the participation rate is the underemployment rate in any one given state. Here we learn the following:

As with Payroll to Population rates, states in the Midwest -- including North and South Dakota, Minnesota, Nebraska, and Iowa -- were among those with the best underemployment rates in 2013.

Gallup's U.S. underemployment rate combines the percentage of adults in the workforce that is unemployed with the percentage of those working part time but looking for full-time work. While P2P reflects the relative size of the population that is working full time for an employer, the underemployment rate reflects the relative size of the workforce that is not working at capacity, but would like to be.


And guess which states were by far the worst offenders when it comes underemployment:

California and Nevada have the highest percentages of their workforces not working at desired capacity. Their rates are about twice those of states at the other end of the spectrum, such as North Dakota (10.1%). Other states hard hit by the recession and declining housing market, including Florida and Arizona, rank among the states with the highest underemployment rates.

Hold on, hold on... Wasn't it an age issue? Perhaps, instead, as this confirms using the relatively young western states it is a, gasp, ability and/or desire to work issue. Apparently that is precisely that case.

This is also what Gallup's conclusion shows:

North Dakota, South Dakota, Nebraska, Iowa, and Minnesota ranked in the top 10 states on P2P rates in 2013, and in the bottom 10 for underemployment, as well as in the top 10 on Gallup's Job Creation Index, highlighting the strong job markets in the Midwest.


In contrast, Mississippi, Florida, New Mexico, Hawaii, Michigan, and North Carolina ranked in the bottom 10 states on P2P rates, and are among the states with the highest underemployment rates. There is more overlap between the top 10 P2P states and low underemployment states than there is among the bottom 10 P2P states and high underemployment states on the two measures. That is mainly because many of the states with low P2P rates also have low workforce participation rates. They still have much room for both job growth and labor force mobilization.

Indeed they do, and since neither CA nor NV have a demographic problem, one can finally turn off the perpetually wrong rhetoric about a demographic crunch. Instead, one needs to structurally address the supply and demand sides of the labor market, because it is this that the US has a massive problem with. Far more so than even an aging workforce, which incidentally has been a boon to the unemployment rate as it is mostly workers aged 55 and older who have been hired over the past 5 years.

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Motorhead's picture

Charts, bitchez!

NotApplicable's picture

Better yet, check this guy out! Breaks into a police station to beat up cops!

I wonder what his ZH user id is?

monad's picture

What was he thinking? When they aren't performing their duties as bankster muscle & drug couriers, when they aren't fucking each other in the back of the cruiser in the supermarket parking lot across from city hall, on the clock, for hours at a time, they can be found at the donut shop.

With their backs to the door.

Dear Infinity's picture

Why work when you can play all day and live better than those toiling in the fields of hay under the heat of May? - Ministry of Employment

GolfHatesMe's picture

Is Linda Green Employed again?

Groundhog Day's picture

who needs a participation rate.  just buy some stocks with the unemployment check and you can make enough money to pay your bills and save for a rainy day.  Working for for fools and people are finally starting to realize that.  In the not so near future everyone will be living in trump towers or their equivalent and the thing that keep me up at night is....what if the door man realizes the fortune being made in the stock market and decides to the fuck will i get in the building.

piceridu's picture

Yes, she's VP of Compliance at Wells Fargo... Citi Mortgage, BofA and Chase.

jomama's picture

i don't want to participate in the US anymore.

MichiganMilitiaMan's picture

So you want to stay in the shadows?

cougar_w's picture

That's fine, because TPTB don't want you to participate, either.

Oh and as you drop out just be sure to leave your savings and 401K where they can get them thanks.

quasimodo's picture

I have a feeling we will be "asked" for some help from our savings and 401's soon regardless of how we feel about it.

Shad_ow's picture

Compliance is not voluntary.

are we there yet's picture

I see a strong corrilation to Democrat / Republican leaning states.

TheFourthStooge-ing's picture


I see a strong corrilation to Democrat / Republican leaning states.

Yep, you're right. There's a strong correlation between states that lean either Democratic or Republican and states with a lot of people who are still fooled by the fake two-party system.

lead salad's picture

What happens when the Fed runs out of ink? Owebama's inkwell for his "pen"?

Occams_Chainsaw's picture

They can always print moar ink...

El Vaquero's picture

Yeah! I made it into the bottom 10. 


But we've always been a poor state.  Think Texas is like a whole other country?  Think again.  Texas doesn't have shit on us for being different.  I still like it here though. 

gwar5's picture

Obama administration: "We are happy to bring to the people the opportunity of not having to work."


PeterLemonJello's picture

Awwwww yeah, the Big Mitten....bringing it home for daddy.

Franktastic's picture

To participate in this system of madness, does it mean to give into a mafia run government?

buzzsaw99's picture

there will be lots of work to do in the halliburton death camps

toady's picture

Stack'em & Burn'em. If you don't, diseases will spread ...

AurorusBorealus's picture

What this really means... .gov will soon find a way to begin seasonally adjusting the participation rate.

tarsubil's picture

Can someone explain what is happening in Minnesota? I hear the application to job posting ratio has gone down a little bit lately. I have absolutely no explanation myself other than people are leaving due to the cold (I could work propaganda!).

quasimodo's picture

I live next door and hear from quite a few folks I know in the twin cities that MN is fast becoming a liberal cesspool. This applies mainly to the twins and outliers from what I hear, many rural areas want nothing to do with the twins and her rhetoric but change is fast approaching. 

I used to enjoy going to the twins but anymore it's a fucking rat race and people can be really rude, although I will say all the towns along our route there and back are pretty nice stops where you are made to feel more than welcome. I have an uncle in a burb southwest of the twins, when he moved there was a pretty libertarian minded guy, strong supporter of the constitution,etc. 

After living there for 15 years is a huge Barry fan and all things associated with anything Democratic.

This proabably doesn't apply to your question but I do know there are people moving away because of what I just posted. And yes, the cold and snowfall get old!

studfinder's picture

With the Mississippi River frozen over, this would be the best time to invade (MN).  Sure there will be holdouts in the BWCA< but drones can take care of them.

zuuma's picture

long, cold, bleak winters do help to make Minnesota

unappealing to the riff raff.

To stay up north in winter requires at least a minimal amount of resourcefulness.

The utterly worthless & useless oxygen burners generally head south.

Skews the numbers a bit.

Big Brother's picture

There has to be some positive correlation between average winter lows and unemployment.  Apparantly, you gotta work to keep warm.

Dewey Cheatum Howe's picture needs to structurally address the supply and demand sides of the labor market,..

That is causing the demographic crunch in the first place when supply dries up the old farts don't leave the workforce creating a larger and larger gap until the supply side is dealt with.

Who is biggest culprit(s) squeezing the supply side? I'll give everyone a hint it is not the businesses themselves.

If you've already determined the solution you need to manufacture the right problem that it solves.

thamnosma's picture

Best employment opportunities:  oil/gas and fascist control center

sunnyside's picture

Working for statists is for losers.... (says Greece & West Virginia)

syntaxterror's picture

This is some seriously bullish info. I just executed a massive buy order for the Vanguard Hope and Change Fund.

Caveman93's picture

I'm sorry participate in what? Busting your ass to earn an ever devaulating fiat currency and support a system that bailed on us 40 years ago? I just ate a box of crappy geazzie fast food and will soon participate in providing my local santitation engineers at the sewage treatment facility and nice healthy deposit of productivity....

Yes, allow me to wash this down with some beer and clams too. Brought to you by your local EBT provider...keeping me productive and locals employed. 

Sanitation engineers staying employed by EBT subsidized fiat. This is all we have left folks.

fuu's picture

Mall of America counts for about half of the MN employment number.

Big Brother's picture

It's also where a lot of youth-unemployed like to hang-out when it's cold out.  There's even a train that will take you there from downtown for $2.00.

sunnyside's picture

Dat cash money, or will they takes my EBT?

WhyWait's picture

Great article, a metric I haven't seen before.  I'll have more to say after I've dug into it.


btw, John Williams posted his revised SGS Alternative Unemployment Rate on Feb 8, unchanged at 23.2%. (!)

Along with his post is a summary of his analysis of the revision of the BLS methodology for calculating U3 (and therefore no doubt U6).
His comments, as much as he made available to non-subscribers:
• As With December, January’s Small Headline Jobs Gain Was Statistically Insignificant • Annual Upside Bias in the Birth-Death Model Increased by 140,000, Despite Last Year’s 119,000 Overstatement of Jobs Growth • Spurious Revisions Used to Spike Payroll Employment Levels • Renewed Concurrent Seasonal Adjustments and New Population Controls Make Comparisons of Monthly Unemployment Detail Meaningless • January Unemployment: 6.6% (U.3), 12.7% (U.6), 23.2% (ShadowStats) • Year-to-Year M3 Growth Slowed to 3.0% in January

Does anyone here subscribe to the Shadow Government Statistics service - which is quite beyond my means right now? If so, without cutting and pasting his copyrighted material (yes I do care about that, depending …,) do you think you could study Williams' analysis of the changes in the way the BLS  compiles the U3 rate, and share what you learn with us? 
WhyWait's picture

Ok, maybe cut and paste just a little ...

djsmps's picture

Thank god Obamacare has liberated me from my need to work. My name is Ron, otherwise known as Dj Z-Fo, and I am 27.

Westcoastliberal's picture

While I appreciate all the charts and graphs and especially the breakdowns by state, can't we just using a broad brush say "There aren't enough fucking jobs!"?

kenezen's picture

We make fun! But, when your most secure and best paid workers making twice as much as Private Sector averages are Tax Paid Federal Workers Your private sector is really screwed up!  And It's the secluded Federal Government Government and our Elected Officials that allow this. WAKE UP It's gotten far, far worse under this president.