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Workers are retreating from the Washington labor market, despite favorable conditions.
The labor force participation rate in Washington dropped two-tenths of a percentage point in October to 64.3%, according to latest data released by the U.S. Bureau of Labor Statistics.
That’s still higher than the national labor force participation rate of 62.7%.
A higher labor force participation rate – share of the working age population working or actively seeking a job, which includes the unemployed – indicates a strong growing economy.
Washington’s labor force was on the rise coming out of the pandemic. But participation dipped starting in July 2023 and has dropped every month since then through October.
In an August Economic Letter, researchers at the Federal Reserve Bank of San Francisco, which covers Washington, attributed the decline in labor force participation to the aging of the population.
“Americans retired at younger ages during the pandemic than they have historically,” the researchers wrote.
The population of Washington grew older over the pandemic, according to the U.S. Census Bureau. Over a million Washingtonians were aged 65 or older in 2022.
Another reason for the drop in labor force participation may have to do with the tech sector, which carried out large layoffs earlier in 2023 and subsequently scaled back remote work options for some employees. That may have discouraged active and potential employees, said Hart Hodges, economics professor and director of Western Washington University’s Center for Economic and Business Research.
“Those people may have some type of severance, or they’re living off of savings. Maybe some of them are trying to start a new company because a lot of folks that have been laid off from some of the larger tech firms do their own startup,” Hodges told the Puget Sound Business Journal. “They’re not going to show up for awhile as participating in the labor force.”
The Federal Reserve researchers projected the labor force participation rate will continue to decline in the next decade as the population further ages. Hart says upward pressure on wages will continue.
