Arkansas 45th In Nation For Labor Force Participation

by Caleb Taylor, The Arkansas Project: The U.S. Department of Labor recently announced that Arkansas’s unemployment rate is at 3.8 percent — the lowest level it has been at since at least 1957.

The overall U.S. unemployment rate is 4.7 percent, so many were quick to point to this news as a sign of Arkansas’s superior economic performance.

However, Arkansas isn’t doing so well when the state’s labor force participation rate is considered. The unemployment rate only counts people as unemployed if they’re actively looking for work. For example, consider the case of someone who’s been unemployed for a while and is no longer actively looking for work. Once you stop looking for work, you’re no longer considered unemployed.

The labor force participation rate — which is arguably a more relevant statistic — measures the percentage of the working age population that is part of the labor force. If you stop working, you’re not a labor force participant.

According to the Bureau of Labor Statistics (BLS), Arkansas had a labor force participation rate of 58.9 percent in May 2016, the most recent month surveyed by BLS.

According to the BLS data, only five other states had worse labor force participation rates in May. The national labor force participation rate in May was 62.6 percent.

This means Arkansas is way behind the rest of the country when it come to getting its working-age population employed.

To be fair, Arkansas has made small improvements in labor force participation in recent years. The last time Arkansas exceeded May’s labor force participation numbers was in August 2012, when the labor force participation rate was at 59 percent. However, Arkansas is still far from matching the much-higher labor force participation of 64 percent it had in March 2006.

James Sherk, a research fellow of labor economics at the Heritage Foundation, told The Arkansas Project that states with low labor force participation rate should strive to make their welfare programs as pro-work as possible.

Sherk said:

To the extent possible, you want your welfare programs to encourage work. This is one of the things that Tennessee found. They had something called TennCare which was a precursor to Obamacare that totally blew up because it was fiscally unsustainable. What (Tennessee) found was an enormous increase in labor force participation when the free health care from the government went away if you didn’t have a job. When that went away, they started working. You generally want — if you’re providing, as most states are, anti-poverty benefits — you want to make sure there are pretty strong work requirements tied into them, because that could be one of the factors holding down the labor force participation.Arkansas has been a mixed bag in recent years with regards to making its welfare state more pro-work. We’ve expanded Medicaid to a working-age population without requiring work from enrollees, because the federal government won’t allow it.

In better news, food stamp recipients in Arkansas are now subject to a work requirement due to the expiration of a federal waiver.

If Arkansas wants to get its labor force participation rate competitive with the rest of the country, we’ll need to ensure that state government programs encourage work, rather than discourage it.

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