Businesses across the country, in communities large and small, have been challenged to find workers since well before the pandemic. As of November 2022, there were about four million more job openings than available workers, equal to about 1.7 open positions for every person looking for a job.

To help employers with the ongoing labor shortage, economic development organizations (EDOs) are creating strategies to expand the pool of workers in their communities. One common approach is to boost local labor force participation by removing obstacles for people who want to work but face constraints. The latest report from the International Economic Development Council, “Growing Your Workforce: Strategies to Raise Local Labor Force Participation,” explores how EDOs are tackling labor force barriers such as the lack of childcare, transportation, justice involvement, the benefits cliff, and others so that more people can participate in the economy.

{{RELATEDLINKS}} Understanding the Labor Force Participation Rate
Labor force participation is important because it measures the percentage of the working-age population (ages 16-plus) that is either employed or looking for work. Many people who are out of the labor force are there by choice — they are retired, ill, or otherwise choose not to work for pay outside the home. However, many others would like to work but face challenges such as employer bias or logistical barriers and would participate with the right accommodations.

Nationally, the labor force participation rate peaked in 2000 at 67.3 percent, declining since then to 62.3 percent. (Labor force participation is not homogeneous across the country, but varies significantly by geography and demographic group.) Many social, demographic, and economic trends have contributed to the declining rate, including slower population growth, the aging of the baby-boomer generation, and economic shocks such as the Great Recession and the Covid-19 pandemic.

Unfortunately, the future doesn’t look brighter: the Bureau of Labor Statistics projects that labor force participation will drop further through 2029, to 61.2 percent. To counteract the decline, EDOs, businesses ,and communities must be intentional about understanding labor force participation trends and developing strategies to ensure that they aren’t leaving potential local workers on the sidelines.

How to Raise Local Labor Force Participation
EDOs are working with community partners to reduce barriers to work through a mix of strategies, including creating supportive programs, helping employers change workplace practices, and changing public policy. Examples of these strategies include:

• Facilitating childcare — The pandemic wreaked havoc on childcare providers and systems, already in short supply in many communities and out of economic reach for many families. State, cities, and companies already were losing billions of dollars a year due to absences and employee turnover costs prompted by childcare issues. Solutions from EDOs and communities include quantifying the problem; encouraging employers to adopt more family-friendly policies; advocating for childcare subsidies and tax breaks; helping new childcare providers enter the industry; supplementing the wages of childcare workers; and creating facilities to lease as childcare centers, for example.
• Providing transportation — Getting to work can be a hard job in itself for people who don’t own a car or are unable to drive. Public transit is a solution for some, but is impractical, inaccessible, unsafe, or nonexistent for others. In Wisconsin, the Wisconsin Economic Development Corporation and state Department of Workforce Development have invested in an on-demand rideshare service that connects urban Milwaukee workers with manufacturing jobs in the city’s suburbs that are beyond the reach of bus lines.
Labor force participation is important because it measures the percentage of the working-age population (ages 16-plus) that is either employed or looking for work.
• Assisting justice-involved citizens — Of the 600,000 people released from state and federal prison each year, an estimated 33 percent can’t find a job during the first four years after release. In San Diego, Reentry Works has partnered with the sheriff’s department to provide incarcerated people with pre-release support in employment and training services, links to jobs, and post-release support via wrap-around services such as transportation, housing and technology, and connections.
• Engaging youth — “Opportunity youth” refers to those ages 16 to 24 who are disconnected from either school or work. Several sources estimate that there are as many as five million opportunity youth in the United States today: one in eight. West Alabama Works, based in Tuscaloosa and serving a nine-county region, hosts “Worlds of Work” expos that reach all students in the region in middle school and again as high school seniors to provide guidance, training options, and connections for in-demand local careers.
• Addressing the benefits cliff — The “benefits cliff” occurs when a worker receives an increase in income or wages that results in a decrease in public assistance (e.g., childcare, healthcare, housing or food subsidies), and an accompanying decline in net financial resources. EDOs and their partners are working on solutions to the benefits cliff by helping workers understand and anticipate the cutoffs for different types of assistance, developing pilot programs that provide bridge funding to eliminate a steep drop-off in benefits, and advocating for legislation that reduces or removes the cliff entirely.

Collecting, analyzing, and sharing data is a necessary first step to understand who is not in a community’s labor force and why. Other solutions to common employment barriers that the report addresses include encouraging worker- and family-friendly business practices, assisting veterans and military families, and creating opportunity in economically distressed neighborhoods.

How Economic Development Organizations Can Help
Based on interviews with leaders in economic and workforce development, the report outlines key roles EDOs can play to expand the pool of labor in their communities, as follows:

• Use data to determine specific barriers. Collecting, analyzing, and sharing data is a necessary first step to understand who is not in a community’s labor force and why; it’s also a natural role for economic developers. Data that quantify the problem can be used to identify potential solutions, apply for grants, start conversations with employers, advocate for new programs or policies, or create a community awareness campaign.
• Help employers to adopt worker- and family-friendly workplace strategies. EDOs can help businesses make adjustments to attract and retain workers, e.g., in regard to wages and paid leave, scheduling, accommodations and support, childcare, or health and wellness. Family Forward NC is an employer-led initiative that helps companies develop policies that are good both for business and for workers with family responsibilities. Employers who meet certain criteria can receive a certification to use as a tool in employee recruitment; studies show that working parents increasingly consider family-friendly offerings when choosing employment.
• Help employers hire workers with barriers to employment. Many potential workers have been screened out in the past for factors unrelated to ability to be a good employee. EDOs can help employers adopt strategies such as connecting with certain populations; using skills as a basis for hiring instead of requiring a bachelor's degree; and not asking about criminal records (when appropriate). Encouraging employers to hire from groups that they previously would have screened out can be one of the most impactful ways to grow local labor force participation in the short term.
Often the intervention required to make a difference in whether someone is able to work is both relatively small and scalable, and provides net benefits to people, employers, and communities.
• Engage community partners and advocate for broader solutions to common barriers. In addition to and as part of these roles, EDOs are engaging community partners in creating solutions — particularly workforce development boards and governments, but also foundations, community-based nonprofits, Goodwill, law enforcement, and sober living facilities. Issues that are common across industries or types of employers are concerns for a community’s overall business climate, meriting solutions that are community-wide or broader. EDOs are well positioned to initiate coalitions, public information campaigns, and sector strategies to address common challenges.

It's important to note that removing barriers to work is not a silver bullet for labor shortages, and that some barriers are more difficult to surmount than others. But often the intervention required to make a difference in whether someone is able to work is both relatively small and scalable, and provides net benefits to people, employers, and communities. Successful strategies to raise local labor force participation start with data that define and inform local challenges; combined with business engagement and community partnerships, EDOs are finding many ways to help companies find the workers they need.