Where is the US Labor Market Slack and Where is it Tight?

In our last post, we explained why there has been surprisingly little wage inflation in the USA despite the persistence of a historically low unemployment rate. The simple reason for low wage inflation. There are around 8 million missing workers who dropped off the labor force.

In this post, we are trying to map out where those missing workers are by state using the pre-recession peaks in the Labor Force Participation Rate (LFPR) and the Employment to Population Ratio (EPR).

In terms of absolute numbers, California, Florida, and Texas have the highest number of missing workers. The states with lowest number of missing workers are District of Columbia, Massachussets, North Dakota, and Vermont.

In relative terms, the results are very different. At 6.75%, New Mexico has the highest percentage of missing worker relative to its Civilian Noninstitutional Population (CNIP). Neighboring New Mexico has the next highest percentage, 6.46%, closely followed by Wyoming at 6.26%.

The tightest labor markets are the District of Columbia with a shortage of 1.82% of its CNIP. Massachussets also suffers from a shortage of workers: 0.61% of CNIP. Wisconsin is next with an excess number of workers that amounts to 1.03% of its CNIP.

A similar dynamic plays out using the pre-recession Employment to Population Ratio.

Once again, California, Florida, and Texas have the highest absolute numbers of missing workers. On the flip side, both Massachussets and the District of Columbia have a shortage of workers. North Dakota and Vermont have a miniscule amount of missing workers.

Relative to their CNIPs, Nevada (6.33%), New Mexico (5.62%), and Wyoming (5.50%) have the highest percentages of missing workers. The District of Columbia has an acute shortage of workers (-2.28%). Massachussets is just about balanced, and Maryland's missing workers amount to 1.10% of its CNIP.

 Related Post: Why There Will Be Little to No Wage Inflation: There are 8 Million Missing American Workers