Civilian Employment to Population Ratio

The employment-to-population ratio is defined as the proportion of an economy’s working-age population that is employed. A high ratio means a large portion of the country's population is employed, while a low ratio means there is a low level of employment (high level of unemployment) or people are out of the labor force, such as retirees.

As an indicator, the employment-to-population ratio provides information on the ability of an economy to create jobs and stimulate economic growth; it ranks in importance with the unemployment rate. Basically, working age population is defined as persons aged 16 years and older.

The rise in this ratio typically corresponds to favorable economic conditions. From the 1950's until the middle of the 1970's, the percentage of the working age population employed ranged from roughly 55% to 58%. However, from the 1980's through the 1990's, the ratio expanded at a rapid pace and reached a high of close to 65% at the end of the 1990's. From around 1982 to this high reading, the ratio gained roughly 8%. This high level of the employment ratio corresponded with one of the most robust growth periods in the US economy, with a small set back during the recession in the early 1990's.

Unfortunately, since the peak at the end of the 1990's, the employment to population ratio has been declining and has recently reached levels not seen in 30 years. It is on track to be the sharpest drop on record. Of course, our population has increased in the last 30 years, so the impact is more meaningful than it would have been in the 1970's for example. In order for the US to have sustained, robust economic growth in the future, this ratio will likely need to increase at a meaningful rate as the economy recovers; otherwise we could see relatively mild economic growth.