LIMA — Unemployment is at a 50-year low in Allen County, but low labor force participation and underemployment complicate otherwise positive statistics.
It may be too soon to declare full employment, or the point at which all who are able and willing to work are employed.
“To me it doesn’t matter how low the unemployment rate gets. So many people are working part-time who want to be working full-time that I can’t consider us at full employment just yet,” said David McClough, associate professor of economics at Ohio Northern University’s Dicke College of Business Administration. “The evidence to support my position is that you don’t see upward pressure on wages yet.
“We see wages rising. We see people starting to get pay, but this is after more than a decade of employment growth. … It’s that kind of slack remaining in the labor market that makes me believe we aren’t at full employment yet.”
Joe Patton, director of Ohio Means Jobs–Allen County, which works with underemployed and persons seeking work, agreed that while the economy is strong, the county has not reached full employment because many would-be workers are no longer counted in the labor force.
He said the average person working with the jobs center finds work within one month, but those who are holding out for higher wages often wait longer.
Allen County’s labor force participation rate in January was just 58%, according to estimates provided by the Allen Economic Development Group. Data dating back to 2014 suggests lackluster improvement in labor force participation, rising and falling between 57% and 58% during that period.
What’s keeping people out of the labor force a decade after the Great Recession?
McClough believes the key issue is low pay and the costs of working, such as childcare and transportation.
“It isn’t worth their time, given what it costs them to work,” he said. “Once wages rise, those folks will start to take the jobs.”
The situation is a bit different for the underemployed.
While some of those workers may lack the skills needed to move into higher-paying positions, Patton said he encounters many who rely on public assistance and could lose their benefits by moving into full-time work. His office last year launched a pilot program to close this benefits gap by offering temporary financial assistance to underemployed persons transitioning into full-time work.
“A lot of people might be riding the bubble, so they get their basic needs met, but they may only be working 20 to 30 hours to get enough cash to pay the bills,” Patton said. “In this market, they could go into a full-time position, make higher wages and put some of that stuff behind.”
But McClough said there’s a financial incentive for employers to employ part-time workers, who aren’t eligible for benefits.
“Firms will only create full-time jobs when they absolutely have to because it’s so expensive to employ people,” he said.
Once that happens, McClough expects to see more employers poaching employees from rival firms to fill jobs.
“That’s where we’ll see the wage bump,” McClough said.
Reach Mackenzi Klemann at 567-242-0456.