PORTLAND, Oregon — Nearly 40 percent of Oregon adults neither work nor look for jobs.
They are students, retirees, stay-at-home parents and discouraged workers.
And they represent a historic share of the adult population, according to a report released this week by the Oregon Employment Department.
The state's labor force participation rate dropped from 60.6 percent to 60.3 percent between May and June, reaching its lowest point since analysts began tracking the measure 39 years ago.
The decline is not unexpected.
Just as baby boomers fueled the go-go economy of the 1990s, they are now driving the participation-rate decline as they retire. Also a factor: Young adults are waiting longer to enter the labor force as they pursue advanced educations.
The demographic trends are all natural, said State Economist Mark McMullen. What isn't is the continued participation gap, a relic of the recession.
"We still have some folks, who in a better market, with better opportunities, would jump back into the labor force," he said.
The new employment report does offer some positive signs: employers added a collective 2,300 new jobs in June, for a cumulative 52,100 in the past year. Many of the jobs gained last month were concentrated in the public sector and retail, but most industries have grown in the past year.
More people also started looking for work. The injection of new jobseekers into Oregon's labor market drove up the unemployment rate from 5.3 percent in May to 5.5 percent in June.
That bucked the national trend. The U.S. unemployment rate actually decreased from 5.5 percent to 5.3 percent.
But Oregon's labor force participation decline is in line with the national trend, driven in large part by an aging workforce, said Tom Potiowsky, an economist who leads the Northwest Economic Research Center at Portland State University.
It's not, he said, because "20-something-year-olds are retiring."
As baby boomers get older, state researchers expect the participation rate to fall even farther, to 59.5 percent by 2022, based on national projections and state demographics, said Nick Beleiciks, a labor economist at the state.
He said many of the economic forces that drove people out of the labor market amid the recession have diminished. Employment growth is steady and the unemployment rate is where it was before the downturn, he said.
McMullen, though, believes there may still be some people stuck on the sidelines. He's concerned that won't be cyclical, but structural.
Rural millworkers, for example, may not be able to find new jobs within their communities and be forced out of the workforce altogether.
"A skills mismatch — that's what we're really worried about," he said.
Employers say they are increasingly having trouble filling jobs.
Though businesses posted more job openings this spring than any other since the recession. But managers said they had a tough time filling 61 percent of the vacancies because too few people applied. Businesses may need to step up their starting wages to attract the workers they want.
In June, most of Oregon's 2,300 new jobs were created by public agencies. Private employers added a net 500 jobs, though some industries, such as retail, posted much stronger growth.
Construction was particularly weak and shed 1,100 jobs. Retailers offset those losses with a collective increase of 3,100 positions.
Information from: The Oregonian, http://www.oregonlive.com