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Labor Force Growth Slows, Hispanic Share Grows

Hispanics account for three quarters of growth
  • February 28 2012

Population growth was driven by Hispanics during the past decade and this will have an impact on the labor force over the next 10 years.

Hispanics will account for three quarters of the growth in the nation’s labor force from 2010 to 2020, according to new projections from the Bureau of Labor Statistics (BLS) and a report from the Pew Research Center. One major reason is that the Hispanic population is growing rapidly due to births and immigration. At the same time, the aging of the non-Hispanic white population is expected to reduce their numbers in the labor force.

In addition, Hispanics have a higher labor force participation rate than other groups. The nation’s labor force participation rate—that is, the share of the population ages 16 and older either employed or looking for work—was 64.7 percent in 2010. Among Hispanics, the rate was 67.5 percent. There are two main explanations for this gap: Hispanics are a younger population than other groups and include a higher share of immigrants.

The figures for Hispanics come from the latest round of BLS projections for the U.S. labor force, covering 2010-2020, which indicate that growth will slow overall. These projections show that the labor force will increase by 10.5 million in this decade, growing to 164.4 million in 2020 from 153.9 million in 2010. That is less than the increase of 11.3 million from 2000 to 2010, and substantially less than the 16.7 million increase from 1990 to 2000. The projected average annual increase in the labor force from 2010 to 2020—0.7 percent—is also less than the annual growth of 0.8 percent from 2000 to 2010 and only about half the 1.3 percent annual rate of growth from 1990 to 2000.

Why is labor force growth projected to diminish? The main reason, according to Pew, is a reduction in the share of people in the labor force. From 1948 to 2000, the U.S. labor force grew faster than the population (1948 is the year the government first started reporting these statistics). This was mainly because a rising share of women went to work. Their labor force participation rate nearly doubled from 32.7 percent in 1948 to 59.9 percent in 2000.

The 2000-2010 decade was the first decade since the 1950s when the growth in the labor force (7.9 perent) was less than the growth in the working-age population (11.9 percent). The BLS projects that this trend will continue through 2020: The labor force will increase 6.8 percent and the population will increase 10.6 percent over the decade.

The movement of women into the workplace is no longer the tailwind behind the growth in the labor force.  The female labor force participation rate peaked at 60 percent in 1999 and has diminished slightly this century.

Meanwhile, other economic and demographic forces have emerged to dampen labor force growth. Economically, the recessions in 2001 and 2007-2009 pulled down the labor force participation rate by generally frustrating people’s efforts to find work. Demographically, baby boomers—the giant generation born between 1946 and 1964—are now entering their retirement years. People ages 55 and older are much less likely to participate in the labor force than people ages 25 to 54, so the overall aging of the U.S. population also will slow the growth of the labor force.

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