Employment is a key economic indicator that measures the health of the labor market in the United States. The employment-to-population ratio represents the proportion of the country’s working-age population that is employed. Monitoring this ratio provides insight into the ability of the economy to create jobs and utilize available labor resources.
In recent years, the U.S. employment-to-population ratio has fluctuated significantly. It declined sharply during the Great Recession in the late 2000s, as millions of Americans lost their jobs. The ratio improved slowly during the economic recovery, but has remained below pre-recession levels. More recently, it has declined again during the COVID-19 pandemic, as public health measures and economic uncertainty led to widespread job losses.
Understanding the current percentage of the population that is employed can reveal how robust the labor market is and whether the economy is utilizing labor resources fully. It can also help policymakers determine whether fiscal or monetary interventions may be needed to boost job creation during economic downturns. This article will analyze the latest data on the U.S. employment-to-population ratio.
Current Employment-to-Population Ratio
According to the U.S. Bureau of Labor Statistics (BLS), the employment-to-population ratio in the United States was 60.1% as of September 2022. This means 60.1% of the civilian noninstitutional population age 16 and over was employed.
The current ratio remains below the peak of around 63% reached before the Great Recession in 2006 and 2007. It reflects a labor market that has improved significantly since pandemic job losses, but indicates there may still be remaining slack, with some Americans who want jobs still unemployed.
Recent Trends
The U.S. employment-to-population ratio has fluctuated over the past two decades:
- In 2000, at the end of the dot-com boom, it stood at 64.7%
- It declined during the 2001 recession to 62.7% in 2003
- The ratio climbed back to around 63% by 2006 and 2007 before the Great Recession
- During the Great Recession, it plunged to lows of 58.2% in 2010 and 2011
- In the slow recovery that followed, it gradually increased, reaching 60.6% by early 2020, just before the COVID-19 pandemic hit
- As the pandemic caused widespread temporary and permanent job losses, the ratio plummeted to 51.3% in April 2020
- It has since rebounded as economic activity and hiring have picked up, reaching 60.1% as of September 2022
Demographics
Employment-to-population ratios vary significantly across different demographic groups in the U.S. economy:
- For adult men (age 20 and over), the ratio was 67.4% in September 2022
- For adult women, it was 57.0%
- Among racial and ethnic groups, Asian Americans had the highest ratio at 62.2%
- Whites were at 58.7%, Blacks at 58.2%, and Hispanics at 62.2%
- Younger workers tend to have lower ratios, with 55.1% for those age 20-24 and 68.7% for 45-54 year olds
- Workers without a high school degree had a ratio of just 43.3%, vs. 72.7% for those with a bachelor’s degree or higher
These disparities indicate certain groups, like youth, racial minorities, lower-educated, and female workers face greater challenges attaching to the labor force and finding employment.
Historical Perspective
Taking a longer historical view provides useful context for understanding today’s 60.1% employment-to-population ratio. This ratio has fluctuated significantly over the past 70 years:
Postwar Era
In the prosperous postwar era of the 1950s and 1960s, the ratio was very high by today’s standards. With a strongly growing economy and few women in the workforce, the ratio reached peaks above 60% every year from 1955 to 1969, getting as high as 63.5% in 1960.
1970s and 1980s
With more women entering the labor force and recessions in the 1970s, the ratio declined to between 58-59% through most of the 1970s and 1980s. The early 1980s recessions drove it down further to 57.2% in 1982 and 1983.
1990s Dot-Com Boom
In the economic expansion of the 1990s, the ratio climbed back up, passing 60% again in 1989. It reached as high as 64.7% during the dot-com boom in 2000, when the late 1990s technology bubble pushed unemployment down to just 4%.
2001 and 2008-09 Recessions
The subsequent 2001 recession caused a modest decline in the ratio to 62.7% by 2003. It then rebounded to 63% before the severe Great Recession, when it plunged to 58.2% in 2010-2011.
The long-run perspective shows today’s 60.1% ratio remains below past peaks. An aging population and more women in the workforce now likely make the peak ratio lower today than decades ago. But it still suggests the economy could further improve to utilize available workers.
State Differences
Employment-to-population ratios also vary across states. The highest ratios as of August 2022 were in:
- North Dakota – 70.1%
- Utah – 68.5%
- Colorado – 67.9%
- Nebraska – 67.6%
- Vermont – 66.6%
The lowest state ratios were in:
- West Virginia – 50.6%
- New Mexico – 56.3%
- Mississippi – 56.5%
- Louisiana – 57.3%
- Alabama – 57.6%
These state-level differences reflect demographic factors, industry mix, and localized economic conditions. States with higher education levels and more high-skilled industries tend to have higher employment ratios. Those more dependent on agriculture, mining, and manufacturing often have lower ratios.
International Comparison
Globally, the U.S. employment-to-population ratio is somewhat lower than in many other advanced economies:
Country | Employment-to-Population Ratio |
---|---|
Iceland | 84.3% |
Switzerland | 79.7% |
Japan | 77.7% |
Germany | 75.5% |
Netherlands | 74.3% |
United Kingdom | 74.5% |
United States | 60.1% |
The U.S. lags behind most comparable advanced economies, suggesting room to further improve employment ratios and labor force utilization. Factors like less generous parental leave, unemployment benefits, and social safety nets may contribute to lower U.S. employment ratios.
Factors Affecting the Employment-to-Population Ratio
Many economic, demographic, social, and policy factors influence a country’s employment-to-population ratio. Key influences include:
Economic Conditions
The ratio tends to rise during strong economic expansions as new jobs are created and fall during recessions as unemployment spikes. U.S. Federal Reserve monetary policy also affects job creation and labor force participation.
Demographics
An aging population with more retirees will naturally have a lower employment ratio. Growth in female workforce participation since the 1950s has increased U.S. ratios. Racial, education, and gender disparities in employment affect the overall ratio.
Government Policy
Policies impacting unemployment benefits, retirement ages, maternity/family leave, childcare supports, disabilities benefits, and worker retraining all influence labor supply and participation.
Labor Market Flexibility
Countries with flexible labor markets that facilitate new business creation and smooth workforce transitions between jobs tend to enable higher employment ratios.
Industry Composition
An economy’s mix of industries, such as manufacturing, agriculture, services, mining, and knowledge work impacts employment ratios across geographic regions.
Understanding how these various forces shape employment-to-population ratios provides greater insight for policymakers seeking to boost labor utilization.
Forecast and Outlook
Looking ahead, employment-to-population ratios in the U.S. are forecast to rise slightly but remain below pre-pandemic levels in 2023 and 2024.
According to BLS projections:
- The ratio is forecast to increase to 60.4% in 2023 as the labor market recovery continues
- In 2024 it is expected to rise further to 60.7%
- But demographic trends will likely keep the ratio below 61-62% in the near term
This outlook suggests a moderately improving U.S. labor market over the next two years. But an aging population and modest economic growth indicate employment ratios may not reach pre-Great Recession peaks again without more robust labor force participation or productivity gains.
Additional policy reforms and workforce development programs may be needed if leaders want to maximize employment and labor utilization going forward. Macroeconomic, fiscal, and monetary policies that promote strong job creation without excessive inflation will also be key to boosting the U.S. employment-to-population ratio.
Conclusion
The U.S. employment-to-population ratio has fluctuated over time, driven by economic cycles, demographic trends, and policy factors. After plunging during the pandemic, it has rebounded to 60.1% as of September 2022. But this remains below peak ratios before the Great Recession.
With slower labor force growth expected in coming years, policies to boost workforce participation among youth, women, and minorities may be needed to increase employment ratios again. Maintaining a strong overall economy conducive to job creation will also help optimize utilization of America’s labor resources. Monitoring and understanding employment-to-population ratios will remain important for leaders working to promote maximum employment and economic prosperity.