Separation from the Wyoming Labor Market
by: G. Lee Saathoff, Economist

"Wyoming is losing the valuable economic resources of human and monetary capital each year."

There is concern in the state over the number of individuals leaving the Wyoming labor market. This article answers some of the questions relative to separations. We define a separation from the labor market, why it occurs, what level of separations Wyoming has experienced over the last few years and what factors cause individuals to leave the Wyoming labor market.

What is a separation from the labor market and why does it occur? To define a separation from the labor market, we first need to define an exit. An exit is anyone who ends employment with a firm. The individual can find employment with another firm within the same labor market or can leave the labor market. Those who leave a firm but remain in the labor market by taking employment with another firm are considered job changers⁽¹⁾. The second group, individuals who leave the labor market, are considered separations from the labor market. How do we quantify separations from the labor market? In this research, a separation from the labor market has been defined as, "Anyone who was reported working in Unemployment Insurance (UI) Covered Employment during any part of a reference year⁽²⁾ and then was not reported working in UI Covered Employment for at least two continuous years after that time." For example, if an individual's Social Security Number (SSN) was found on wage records⁽³⁾ in any quarter in 1993, but was not found in any of the quarters in 1994 or 1995, s/he is considered an individual who separated from the labor market in 1993. This definition does not include individuals who change employers within the state of Wyoming. These individuals are classified under the definition of job changers. Job changers will be analyzed in a future issue of Wyoming Labor Force Trends.

We divided separations from the labor market into two subsets. The first subset is departures. Departures includes individuals who worked in at least two years prior to separating from the Wyoming labor market. For example, if an individual was found to have worked in at least one of the quarters in 1992 and at least one of the quarters in 1993 but was not found in any of the quarters in 1994 or 1995, s/he is classified in the departures subset for 1993. These individuals are found to have had a stronger attachment to Wyoming than the second subset.

The second subset is that of itinerant workers. Itinerants are individuals who worked in the reference year but did not show up on wage records the prior year. For example, if an individual worked in 1993, but was found not to have worked in any of the quarters in 1992, 1994 or 1995, s/he is considered an itinerant job holder in 1993.

What is Wyoming's history of separations from the labor market? Wyoming seems to experience a high quantity of separations⁽⁴⁾, although comparable data are unavailable from other states. Data for the years 1992 through 1997 were used for this study. The following tables and charts refer to the years 1993 through 1995. This is due to the fact that it is necessary to have one prior year and two post years to analyze a reference year.

All three of the reference years show very similar results. Figure 1 shows that the number of separations from the labor market ranged from 48,634 in 1993 to 52,250 in 1995. This figure shows that the number of separations increased steadily over the three reference years. These separations accounted for almost 20 percent of each reference year's labor market (see Table 1).

In 1993 there was a total UI covered labor market⁽⁵⁾ of 271,622 individuals (see Table 1). Of this total, 48,634 individuals were not found in the Wyoming covered labor market in either 1994 or 1995. They had left or separated from the Wyoming labor market. This computes to 17.9 percent of the total Wyoming UI covered labor market. Similar percentages, 18.4 percent in 1994 and 18.6 percent in 1995, were found in the other two reference years. This means that almost one out of every five workers in the Wyoming labor market left the market each year.

The largest groups of separations were in the Services, Retail Trade and Construction industries (see Table 1 and Figure 2). These three industries, along with Agriculture, also had the highest percentage of separations in the state relative to employment for that industry, ranging from 19.8 percent to 29.7 percent (see Table 1). The lowest percentage of separations from the labor market were found in the Local and State Government sectors. Table 2 takes the total number of separations and divides them into the two subsets departures and itinerants. Overall, the number of itinerant separations was about the same as departures. This table shows that three industries had more itinerant separations than departure separations all three reference years: Agriculture, Construction and Services. The lowest proportion of itinerant separations was found in State and Federal Government.

What factors could cause the separations from the Wyoming labor market? Separations can occur for a number of reasons. Some of the reasons that an individual might leave the labor market would include getting fired, getting laid off due to business shutdowns or cutbacks, finding work in another state, going back to school, staying home to take care of children, quitting, retiring, or dying. From an economic standpoint, these separations can have an increased negative effect on the Wyoming economy if these individuals not only leave the labor market but choose to leave the state. Employers use time and resources to train new hires. This training is lost to the Wyoming economy if these individuals leave Wyoming. We are unable at this time to determine where such individuals go after they separate from the labor market. We are also currently unable to determine demographics about many of these individuals such as age, residence, education level or gender.

The main reason for dividing the separations into departures and itinerants was to analyze the labor market attachment that these individuals had to Wyoming. Departures seem to have a greater attachment to the labor market. The itinerant job holders overall have relatively no attachment to the Wyoming labor market. We were able to link demographic information⁽⁶⁾ to approximately 65 percent of departures but only 20 percent of itinerants.

Two primary reasons exist for the itinerants' lack of attachment. First, these workers come from out-of-state to work in Wyoming on one project and when it is completed, they leave the state. This could account for the high quantity of itinerant job holders in both the Construction and the Services industries. Construction and Services projects could get bid out to out-of-state firms because companies in Wyoming cannot perform the work or firms in Wyoming get underbid. If firms in Wyoming cannot perform the work, these industries are ones that Wyoming should look at for economic development.

The second reason that itinerant workers lack attachment to the Wyoming labor market is tourism. Tourism is an area that covers the Retail and Services sectors and has high seasonality⁽⁷⁾. Firms that are tourist-oriented and hire workers from out-of-state for the season cause both a labor and monetary drain on the Wyoming economy. These firms use time and resources to train workers and the workers take their skills, money and training with them when they leave. Agriculture and Construction fall under the same seasonality as tourism and can thus have the same effect on the Wyoming economy.

What can we conclude? First, there is a consistent pattern to the labor market separations from year to year of almost 20 percent. Second, certain industries (Agriculture, Construction, Retail Trade and Services) that have higher rates of separations than other industries, though most of the industries have rates greater than 10 percent. Third, Wyoming is losing the valuable economic resources of human and monetary capital each year. Wyoming employers use time and resources to train individuals who ultimately leave the state. In addition, much of the loss is due to out-of-state firms and workers performing itinerant jobs, then leaving the state and taking their labor and money with them. This loss of human and monetary capital has an overall effect on the strength and growth of the Wyoming economy that needs to be addressed on a local and statewide basis.

The April, May, June and July issues of Wyoming Labor Force Trends will analyze four related areas of the Wyoming labor market. April analyzes steady workers/different employers, individuals who are attached to the Wyoming labor market, but have high rates of job changing. May will analyze steady workers/same employer, those who are attached to the Wyoming labor market and are attached to one specific employer. The June issue will look at the overall turnover and job flow rates employers experience in Wyoming. This looks at which industries have more stable working environments and if wages are a factor. Finally, July's issue will look at the converse of separations, that of new hires (individuals that were not previously in the Wyoming labor market).

1 Brett Judd, "The Wyoming Wage Record Classification System," Wyoming Labor Force Trends, March 1998, pp. 1-3; Gayle C. Edlin, "Changing Jobs Pays Off," Trends, October 1996, pp. 1-6.

2 Reference year refers to the specific year analyzed. If 1993 is the reference year, 1992, 1994 and 1995 are the years used to analyze it.

3 Wayne M. Gosar, "Wyoming Unemployment Insurance Wage Record Summary Statistics: A New Way To Look At Wyoming," Wyoming Labor Force Trends, May 1995, pp. 4-5.

4 Phil Brooks and Mike Evans, "Population Migration Flows Among the Mountain & Plains States," Wyoming Labor Force Trends, September 1998, pp. 6-8.

5 UI covered labor market does not include individuals who are unemployed or not covered by Unemployment Insurance.

6 Demographic information is obtained from a number of source databases including: Driver's License, Employment Resource Centers and Vocational Rehabilitation. That is, demographic information is currently available for an individual who obtains a Wyoming driver's license, registers for work at an Employment Resources Center or seeks vocational rehabilitation.

7 Gregg Detweiler, "Seasonal Adjustment of Mining Employment," Wyoming Labor Force Trends, October 1998, p.7.

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