Public policy group study explores Utah jobless rate paradox
At the height of the national labor market boom in 2000, Utah's participation rate for all working age residents 16 years and older who were employed or looking for jobs registered at 74.7 percent.
Utah posted a significantly higher labor market participation rate than the 67.1 percent national average.
According to the United States Center for Labor Market Studies, the nation's 2000 labor force participation rate was the highest recorded during the post World War II era in America.
In addition, the U.S. working age employment to population ratio registered at 64.4 percent, the highest rate posted in the nation's history.
The working age employment to population ratio for Utah stood higher at 69.9 percent in 2000 and the state's average unemployment rate registered at 3.2 percent.
Job growth across the state since the 2001 economic recession has been low, indicated the latest research study completed by the Utah Foundation.
Interestingly, Utah's unemployment rate has also remained relatively low, pointed out the independent public policy organization.
One factor contributing to Utah's unemployment paradox is the fact that many displaced workers are waiting out the economic downturn before re-entering the state's labor force to look for jobs, explained the independent public policy organization's researchers.
Unemployment numbers only count the individuals who are actively looking for work. Hence, people who have stopped searching for jobs are not considered part of the labor force.
From 2000 to 2003, the working age population in Utah increased from 1.53 million to 1.66 million, a growth of 8.7 percent.
Meanwhile, the labor force only grew only 3.9 percent.
A second factor in the unemployment paradox is an increase in the number of people working for themselves and, thus, not being counted in Utah's official job numbers, added the foundation researchers.
The self-employed population encompass a wide array of Utahns - entrepreneurs attempting to establish businesses; individuals working on their own after having been displaced from previous career jobs and retirees working part-time after accepting early benefits from former employers.
The self-employment trend in Utah during the last recession seems to be in accord with the national trend, indicates the independent public policy organization. Between 2000 and 2002, the number of Utah establishments with no employees witnessed unprecedented growth, jumping from 6,849 to 9,458 for a 38.1 percent increase. In fact, the expansion in Utah's self-employed businesses with no workers accounted for 49.6 percent of the total growth in establishments of any size in 2001. The self-employed businesses experienced 82.7 percent growth in 2002.
During the 1990s, the percentage of overall employment expansion never exceeded 28.5 percent in Utah. But in 2003, the number of businesses with no employees grew by a negligible seven establishments, less than 1 percent of total expansion, which may indicate that the job climate in the state has started to warm.
A third factor in the unemployment paradox is highlighted by the fact that, in 2003, Utahns were the third most likely population in the U.S. to hold multiple jobs. U.S. Bureau of Labor Statistics data shows that multiple jobholders accounted for 9 percent of the total employment in Utah, up from 7.8 percent in 2002. The national average, on the other hand, was 5.3 percent in 2002 and 2003.
During the designated period, Idaho and Utah experienced the largest increases in multiple job-holding rates at 1.2 percentage points, explained labor bureau statistics economist Jim Campbell.
Since 1996, the national trend has been a decline in multiple job-holding rates, falling from 6.2 percent to 5.3 percent. However, Utah was among the five states experiencing an increase.
In fact, Utah was the only state that "experienced an increase in multiple job-holding greater than 0.4 percentage points over this span," noted Campbell.
All groups of workers 55 years of age and younger experienced declines in employment ratios during the recessionary and jobless recovery between 2000 and 2003. But the trend was that the younger the age group, the more substantial the decline.
Utah teens and young adults ages 20 to 24 experienced the sharpest declines in employment and fared worse than national counterparts, pointed out the foundation. The employment ratio for teens fell 9.7 percentage points, while young adults aged saw a decline of 5.2 percentage points.
According to the U.S. Center for Labor Market Studies, the 3.7 percent ratio for the nation's teens in 2003 was the lowest recorded since 1948. Surprisingly, Americans ages 55 to 64 years saw a significant gain of 4.6 percentage points in employment ratio.
A recent study indicated that the number of jobs with little or no physical demands increased significantly in the 1990s, pointed out Richard Johnson, a research associate at the Urban Institute. The increase enabled older populations to continue working and not accept early retirement.
Educational attainment is another factor to consider, explained the Utah Foundation.
Based on 2003 data, the statewide unemployment rate for Utahns ages 25 years and older with less than a high school diploma registered at 9.2 percent. Utah ranked 26th lowest in the U.S., compared to the national average of 8.8 percent.
For Utahns 25 years and older with high school diplomas, the jobless rate significantly decreased to 4.2 percent, the 10th lowest in the U.S. Unemployment climbed to 4.4 percent or 30th in the U.S. for Utahns with some college experience or an associate's degree. But joblessness dipped to 2.1 percent or 14th lowest in the nation for Utahns with at least a bachelor's degree
The trend may not be complimentary to the educational attainment strengths of Utah's labor force. With 34.3 percent of the labor force having an associate's degree or some college experience, Utah ranks fourth nationwide. However, Utah ranks 22nd in the country when it comes to bachelor's or higher degrees attained at 30.4 percent. The significantly low unemployment rate for bachelor's or higher degree holders may suggest that Utahns are not as educated as employers would like the labor force to be, concluded the foundation report.