A third of Utahns ages 16 and older are not participating in the labor force, the lowest activity in 26 years.
The numbers have risen 6 percent since 2008, Mark Knold, chief economist for the Utah Department of Workforce Services, said in a phone interview.
The figure measures factors in the 61 percent of those employed and the 5.7 percent who are unemployed and looking for jobs.
Recently, Utah’s unemployment rate fell to 5.7 percent as the state added 30,300 jobs in 2011, but the state has built up a deficit of jobs during a recovery period that will take years to catch up.
“The message [the unemployment rate] tells throughout history is generally a good message about labor force utilization,” Knold said. “Unfortunately, in the current environment, the message that it is sending is probably more muddied than it is clear.”
Knold says the unemployment rate isn’t as telling because it doesn’t count how many people have given up looking for a job.
Another untold story of Utah’s economy is the growing job deficit in the state that lower unemployment rates aren’t able to immediately solve.
Before the recession, Utah’s total work force was at 1.25 million in 2008, but fell 5.1 percent to 1.19 million in 2009. Since then, Utah has recovered to 1.21 million in 2011, but that doesn’t account for amount of young people who aged into the labor force during the three-year recovery period.
Utah should have been adding about 19,000 jobs a year to provide jobs for the rising labor force, Knold said. Moving forward, the state will have to create more than 19,000 jobs a year to fill the void the recession created.
The state is currently behind by 57,000 jobs, and that number is growing every year.
“There’s a psychological strength that comes with the idea that we’ve got all the jobs back that we had prior to the recession,” Knold said. “But in a state like this, and with the amount of labor force growth that we have, that still doesn’t mean that you’ve erased the consequences.”
Utah was able to add more than 30,000 jobs last year and is projected to add another 34,000 jobs in the coming years, said David Stringfellow, senior economist of the governor’s office of planning and budget.
Those growth figures would put the state back on track to make up its job deficit.
“As the economy improves, we expect people will begin to participate more fully in the labor force,” Stringfellow, who is hesitant to cast a negative light on the unemployment rate, said.
But even if more workers are brought in, they still make less than the national average in wages.9 comments on this story
Utahns made an average of $39,811 in 2011, a 2.5 percent growth from 2010, according to the economic summary from the Governor’s Office. The average worker in the U.S. made $50,606 last year, which puts Utahns well below the national average in pay.
The good news is that Utah has been able to muster up some good job growth rates and can easily do it again, said Knold.
Another upside is most people left the labor force by going back to school, which could lead to a more skilled talent pool in the state in the coming years.