Note: The Idaho Center for Fiscal policy is continuing to monitor and report on the state’s labor force participation rate for trends, possible causes, and possible solutions to problems. This information will be updated periodically.
As the United States continues its economic recovery from the shocks of the COVID-19 pandemic, Idaho remains something of an outlier in a significant way: the state has fewer residents returning to work.
Idaho workers left the labor force steadily from September 2020 to January 2022. At its low, labor force participation fell to 61.8 percent in December 2021 and January 2022. Idaho’s labor force participation ticked up in February 2022 by a modest .1 percent to 61.9 percent. Before the pandemic, 64.3 percent of Idaho adults were working outside of the home. Idaho’s low labor force participation rate helps explain why Idaho’s businesses are struggling to find and retain workers in our growing state.
Idaho, like the rest of the country, saw historic unemployment rates beginning in April 2020, due to the COVID-19 pandemic. Just like many other states, Idaho’s employment rates have not yet returned to pre-pandemic levels. Still, Idaho’s recovery isn’t typical of the rest of the country. Its labor force participation rate is lower than neighboring states. Utah’s labor force participation rate was 67.4 percent in February, for instance, and Montana’s was 62.2 percent. Utah and Montana did not see the same sharp downward trajectory in labor force participation that Idaho experienced. Wyoming saw a downward trend during the same 15-month period as Idaho, but its labor force participation is still significantly higher than Idaho’s at 63.7 percent as of February.
Idaho’s work force participation is a cause for concern in light of the grave need for workers in many Idaho businesses and public sectors such as schools. Much of the conversation about labor force participation has focused on lower-wage and service industry jobs. It is important to remember, though, many workers who leave such jobs often find new jobs quickly, and also don’t have the means to stay out of the labor force for a significant period of time.
Economists point to several explanations for the sluggish labor force participation recovery in other jobs. These include:
- COVID-19 risks to older Americans: Americans age 55 and older are the largest demographic leaving the labor force. This is consistent with Idaho-specific data.1 Older Americans are weighing the dangers of returning to work in light of increased health risks posed by COVID-19.
- Childcare Costs: Parents and other caretakers have also been leaving the labor force because of school and daycare closures and risks to children, who were until recently largely ineligible for COVID-19 vaccines.
While the situation is fluid and evolving, a state-level earned income tax credit could help. The credit would help Idahoans of modest incomes keep more of the money they earn, and would help cover childcare costs so parents could return to work. This could help address one of the main reasons already identified for Idaho’s low labor force participation rate.
The earned income tax credit is one possible solution. Others may emerge later. The Center will continue to track labor force participation rate and update it here.
1Communication with Idaho Department of Labor staff.