Key Points

• Total nonfarm payrolls for the U.S. rose by 372,000
• Unemployment rate remained at 3.6%.

The post the U.S. Bureau of Labor Statistics reported the unemployment rate remained at 3.6% appeared first on For Opportunity.

State unemployment rate stands at a record low

On Friday, April 15th,����released state employment numbers for Ģ����Ƶ. They show that our state unemployment rate stands at a record low of 3.1%, the lowest since the BLS began tracking in 1976.

The Ģ����Ƶ Center for Opportunity’s (GCO) take: “At 3.1%, Ģ����Ƶ is tied with Arkansas for the 16th lowest unemployment rate, a half point below the national unemployment rate of 3.6%,” said��Erik Randolph, GCO’s director of research. “Ģ����Ƶ is among the 16 states that have recovered all the private employment lost due to the pandemic. According to our analysis, Ģ����Ƶ ranks 10th in the nation when comparing private employment to each state’s pre-pandemic private employment growth trajectory.”

“Labor force participation is still an area of weakness. Ģ����Ƶ’s rate ranks 26th in the nation. While Ģ����Ƶ’s labor force participation rate edged up from 61.9% in February to 62.1% in March, it is still below its pre-pandemic rate of 62.8%. It is also well below the states with the highest rates. Nebraska leads the nation with 69.8% participation, just 0.2 points below its pre-pandemic rate”

“The national economic picture is worrisome and can put a damper on the improving job picture. Rising inflation and supply-side problems are creating uncertainty that will impact entrepreneurial decision-making and alter the economic outlook. Some economic indicators are beginning to point to a possible economic slowdown. Although these prognostications are not certain, they are concerning.”

For more, read Randolph’s research report on the economic impact of the pandemic shutdowns.

The post Ģ����Ƶ Unemployment Rate: Lowest Record Since 1976 appeared first on For Opportunity.

Is there any reason not to cheer? Ģ����Ƶ’s unemployment rate dropped to 4.1 percent in May.��

Here are three reasons why this looks good for Ģ����Ƶ.��

First, the unemployment rate is declining, giving optimism that the economy is bouncing back from the pandemic.

Second, there were only two periods in recorded history when Ģ����Ƶ’s unemployment rate was this low or lower. Starting from 1976—the extent of available data from the U.S. Bureau of Labor Statistics (BLS) on unemployment rates for the states—the first period was between October 1998 and July 2001 when the rate reached as low as 3.4 percent. This period occurred after the long economic expansion of the 1990s.��

The other period—from April 2018 to the start of the pandemic—just occurred with Donald Trump in the White House. During this period, Ģ����Ƶ broke its best record by achieving 3.3 percent.

Third, Ģ����Ƶ’s rate is the 16th lowest in the country, beating out 34 other states. For comparison, the United States as a whole has a rate of 5.8 percent rate, considerably higher than Ģ����Ƶ’s.

But wait. Is the unemployment rate artificially low?

While optimism is merited, it is important to put the unemployment numbers in perspective.

Unemployment percentages do not capture those who do not participate in the labor force. According to the BLS, anyone not employed who had not actively looked for a job during the prior four weeks is not part of the labor force. Therefore, any person temporarily not looking for work is not accounted for when the BLS calculates the official unemployment rate. Especially now with all the repercussions of the pandemic, all those potential workers who have been sitting on the sidelines for the last four weeks are simply not counted.

The behavior of labor force participation is a loose link for unemployment numbers. Normally, when economic times are good, sidelined workers and even retirees come back into the labor force, which can push the unemployment rate up. When times are bad, the opposite happens. Workers drop out of the labor force, artificially lowering the unemployment rate.

During the depth of the pandemic, and as expected, the labor force participation rate in Ģ����Ƶ dropped—to 59.4 percent to be precise, compared to 62.9 percent just prior to the pandemic. In terms of real people, there were an estimated 260,575 fewer workers participating in the labor force—who were not counted among the unemployed, to emphasize the point. Participation bounced back some to 61.7 percent, but still there are 40,934 fewer workers in the labor force.

Other ways to measure it

BLS’s U-6 labor underutilization metric is another way to shed light on unemployment. It adds to the unemployed those discouraged and other “marginally attached” workers as well as part-time workers wanting full-time work but cannot find it.��

Nationally, the U-6 rate hit a historic high of 22.9 percent in April 2020 representing 36.3 million people. It has since dropped to 10.2 percent representing 16.5 million people. However, in the months prior to the pandemic, the rate was at historic lows—in fact, as low as 6.8 percent. Obviously, while 10.2 percent is far better than 22.9 percent, it is significantly worse than 6.8 percent, representing a difference of 5.3 million workers.

Unfortunately, monthly U-6 data is not available for the states, making any comparison difficult. The BLS currently publishes only experimental U-6 state data averaged over a year’s time.

More useful for the states is the Nonfarm Employment estimates from BLS’s Current Employment Statistics survey. Only two states—Utah & Idaho—have caught up with employment from where they were in February 2020 before the pandemic hit. In contrast, the U.S as a whole is still 5% behind. Ģ����Ƶ ranks 16th among the states and is 4.0 % behind. Hawaii (-14.8%), New York (-9.6%), and Nevada (-8.6%) are the three states furthest behind.��

If we use standard economic ARIMA Model time-series forecasting to estimate where employment would have been absent the pandemic, no state is back on track. The United States is 6.8% behind, and Ģ����Ƶ ranks near the middle in 27th place at −6.1%. Utah and Idaho lead the pack being the furthest ahead, while Hawaii, Nevada, New York, California, and Massachusetts trail the pack.

Observations on state differences and policies

In viewing the differences in employment among the states, the more rural states appear to be doing better. The states more dependent on tourism appear to be doing worse. State governments that implemented less severe lockdowns appear to be doing better. To test these observations, we will be running regression analyses to tease out any correlations. We will post the results when completed.

In the meantime, it is important for government to adopt policies that will help businesses to rebound and make it easier for startups. The goal should be not to just lower unemployment but also to bring those sidelined workers back into the labor force.

Erik Randolph is the Director of Research at the Ģ����Ƶ Center for Opportunity.

The post Putting Ģ����Ƶ’s employment numbers in perspective appeared first on For Opportunity.

By Erik Randolph

Don’t be fooled by Ģ����Ƶ’s unemployment rate. While many are breathing a sigh of relief that barely one in ten Ģ����Ƶn’s are out of work, the reality is much worse.

Ģ����Ƶ’s unemployment rate (U-3) dropped to 9.7% last month—according to official numbers from the U.S. Bureau of Labor Statistics released today.����

This number is adjusted for seasonal fluctuations, if that still makes sense given the current conditions. Otherwise, Ģ����Ƶ’s rate would be 9.5%, relatively close due to the time of the year. The Bureau of Labor Statistics regularly makes adjustments to smooth out the data from the impact of seasonal employment, such as temporary employment during the Christmas season, teenagers working as summer camp counselors, or landscaping jobs dependent on the growing season. The smoothing out of data is intended to help economists detect trends more easily.��

The sense of relief comes from more dismal expectations that the unemployment rate itself could have been much worse—especially considering the unprecedented havoc on the economy from COVID-19—and from the encouraging news that Ģ����Ƶ is among the 38 states where the rates are coming down.��

��Ģ����Ƶ’s unemployment rate is among the lowest of the states. The nation’s rate was 13.3% (adjusted). Three states—Nevada, Michigan, and Hawaii—had seasonally adjusted rates of 25.3%, 22.6%, and 21.2%, respectively.��

However, one in ten workers unemployed is still very high. There were 475,338 unemployed Ģ����Ƶns last month (seasonally adjusted). That number was 161,147 in February. The state went from a historic low unemployment rate of 3.1% (adjusted) to a record high of 12.6% (adjusted) in just two months.��

The Loose Link

The situation is actually worse than what the unemployment numbers show. First, there is a loose relationship between employment and the labor force. The Bureau counts only those who are employed or actively looking for work as part of the labor force.��

When the economy does well and jobs are more plentiful, the labor force grows in size because more people decide to enter or reenter the labor force. However, when the economy grows sluggish and jobs become harder to find, the opposite happens: the labor force shrinks.

The labor force participation rate demonstrates this well-known phenomenon. The chart below illustrates this relationship in Ģ����Ƶ. By definition, the labor force participation rate shows the percentage of workers in the labor force to the potential population of those who could be in the labor force, defined as all individuals age 16 and older who are not institutionalized, such as in prison, and—as the Bureau of Labor Statistics defines it—not in the military.��

Of course, there are other factors at work. The aging population is pushing down the participation rate. An issue of great concern is the increasing proportion of individuals in their prime working age who have dropped out of the labor force altogether. This has been a topic of study from across the political spectrum, and recessions seem to only aggravate the trend.��

The size of the recent labor force loss is astounding. A record number of 262,577 Ģ����Ƶns dropped out of the labor force in April. This is the seasonally adjusted number. The unadjusted number is 286,733.��

The labor force bounced back just 0.1% in May, but still the net effect is that 256,208 individuals dropped out since February.��

What this all means is that 570,399 Ģ����Ƶns either lost employment or dropped out of the labor force since February. If you add back in the 161,147 who were unemployed in February, there are at least 731,546 workers either unemployed or who dropped out, and 751,116 workers if we use unadjusted numbers.��

However, we are still missing one part of the analysis. Prior to February, the labor force was growing and grew at a rate of 1.6% from the prior year (unadjusted). This implies that the labor force number should have grown over the last three months, perhaps to 5,208,019 in May (adjusted). This would make the combined unemployment/labor force problem closer to 15.0% (adjusted), or 14.8% (unadjusted).

��

It Gets Even Worse

The official unemployment rate does not capture everyone, including those who are working part-time but want to work full-time. For this, we must turn to the alternative measurement of labor underutilization known as U-6, the U.S. Bureau of Labor Statistics’ broadest metric. The national number jumped from 7.4% in February to 22.4% in April, and back down to 20.7% in May.��

Unfortunately, the Bureau does not publish U-6 on a monthly basis for the states. For statistical reliability reasons, they only provide annual rolling averages each quarter year.��

Most recently, Ģ����Ƶ’s annual rolling average U-6, ending the first quarter of 2020, was 6.7% compared to the national rolling average of 7.2%. This implies that Ģ����Ƶ’s U-6 is probably around 19.3%. Combining this number with those who dropped out of the labor force yields an impact well above 20%, probably around 25%, or one-in-four Ģ����Ƶns adversely affected, instead of just one in ten.

Note on Sources: All data came from the U.S. Bureau of Labor Statistics, except for the identification of the recessions that came from the Business Cycle Dating Committee of the National Bureau of Economic Research.����

Erik Randolph is Director of Research at the Ģ����Ƶ Center for Opportunity. This article reflects his calculations, analysis and opinion and does not necessarily reflect that of the Ģ����Ƶ Center for Opportunity.

To learn more about what Ģ����Ƶ Center for Opportunity is doing to help get Ģ����Ƶns back to work check out our initiative.��

��

��

��

��

��

The post Ģ����Ƶ’s Real 2020 Unemployment Number appeared first on For Opportunity.