Friday, September 26, 2014

If you live in Georgia, come work in Atlanta

The latest job numbers from the U.S. Bureau of Labor Statistics show Georgia’s jobs growing 2.0 percent over the 12 months ending in August, and the numbers for the Atlanta metro area are even better – rising 2.1 percent over the past 12 months. Only the smaller labor markets of Augusta (up 2.5 percent, and Savannah (up 2.4 percent) showed better growth over the year.

While 55 percent of the state’s population resides in the Atlanta metro area, over the past year, the area has accounted for almost 65 percent of the state’s job growth since last August.

The numbers are equally impressive when you look at various industries in the state. 

More than 69 percent of the job growth in Professional and Business Services happened in the Atlanta area. A significant portion of that category were employment services providing temporary workers to companies. Among temporary help firms, nearly 87 percent of that job growth was in the Atlanta metro area.

Nearly 53 percent of the job growth in Leisure and Hospitality industries happened in the Atlanta metro area, mostly in the restaurant industry.

While we think of the Atlanta metro area as a service-based economy, in Construction, 64 percent of the job growth occurred in the Atlanta metro area, and almost 50 percent of the job growth in Manufacturing occurred in the Atlanta metro area. 

Likewise, in industries where the Atlanta metro area is showing slowing rates of growth, it is affecting the statewide figures as well. In Health Care, which accounts for 10 percent of all jobs in the state, the Atlanta metro area added only 2,000 jobs over the past 12 months, an increase of less than one percent. Statewide, the figure was only slightly better, with Health Care adding 4,300 jobs or up one percent over the year.

The message is clear to Georgia residents, the jobs are in the Atlanta metro area.

Job Growth/Losses, 12 months ending in August for Georgia metro areas:

Albany, - 0.7 percent
Athens, 0.3 percent
Atlanta, 2.1 percent
Augusta, 2.5 percent
Brunswick, - 1.2 percent
Columbus, - 0.1 percent
Dalton, - 0.3 percent
Gainesville, 1.9 percent
Hinesville, 2.0 percent
Macon, - 0.1 percent
Rome, 0.5 percent
Savannah, 2.4 percent
Valdosta, 0.0 percent
Warner Robins, 0.2 percent

Tuesday, September 23, 2014

Wages Rise Significantly in Georgia for Covered Workers

Total wages reported for workers in Georgia rose 5.8 percent for the 12-month period ending in March 2014, according to new data released by the U.S. Bureau of Labor Statistics.

The data comes from the BLS Quarterly Census of Employment and Wages (QCEW) program, which publishes a quarterly count of employment and wages reported by employers covering 98 percent of U.S. jobs. 

The increase is the highest recorded for Georgia since the fourth quarter of 2012 and contrasts with six consecutive quarters of decline between the fourth quarter of 2008 and the first quarter of 2010.

The increase in total wages surpasses the national average percent increase of 5.6 percent and was the second highest among southeastern states, following only Florida, which recorded a 6.0 percent increase over the year.

Average Weekly Wages

Average weekly wages in Georgia rose 3.4 percent to $972 per week, the highest among all southeastern states but still below the national average, which rose 3.8 percent to an average weekly wage of $1,027.

The increases compare to a 1.5 percent increase in the rate of inflation (CPI-U) between March 2013 and March 2014.

Since workers’ purchases are dependent upon their level of wages, the increase in wages are a good indicator of future consumption growth and income tax revenue for states.

Total wages represent all wages paid by employers to all employees covered by state unemployment insurance and can grow due to a combination of adding or reducing the number of workers and higher or lower wage levels.

Average weekly wages reflect total wages divided by the number of workers and can be affected changes in the mix of high and low wage occupations as well as reflecting pay raises for workers.

As an example, if one worker is paid $600 a week and the company adds a second worker at $800 per week, total covered wages increase from $600 to $1,400 ($600 + $800), while the average weekly wage increases to $700 per week ($1,400 / 2).

Annual percentage changes in total covered wages for states in the Southeast (1st Quarter 2013 – 1st Quarter 2014) are:
Alabama, 2.4 percent
Florida, 6.0 percent
Georgia, 5.8 percent
Kentucky, 3.6 percent
Mississippi, 2.6 percent
North Carolina, 5.1 percent
South Carolina, 4.4 percent
Tennessee, 4.1 percent

Average weekly wages and percentage change for states in the Southeast (1st Quarter 2013 – 1st Quarter 2014) are:
Alabama, $825, 1.6 percent
Florida, $868, 3.0 percent
Georgia, $972, 3.4 percent
Kentucky, $811, 2.7 percent
Mississippi, $707, 1.7 percent
North Carolina, $914, 3.4 percent
South Carolina, $787, 1.9 percent
Tennessee, $874, 2.2 percent

Technical Note

The data comes from the BLS Quarterly Census of Employment and Wages (QCEW) program, which publishes a quarterly count of employment and wages reported by employers covering 98 percent of U.S. jobs. The QCEW is a comprehensive tabulation of employment and wage information for workers covered by State unemployment insurance (UI) laws and Federal workers covered by the Unemployment Compensation for Federal Employees (UCFE) program. 

Unlike other BLS data, QCEW is a census rather than a sample survey, making its results more reliable and not subject to sampling error.

Sunday, September 21, 2014

August: A Good Month for Georgia in Nonfarm Job Growth

In August 2014, Georgia added 15,800 nonfarm jobs on a seasonally adjusted basis after increasing by a revised 19,400 jobs in July. The one-month percentage increase of 0.4 percent tied the state with Alabama for the third best over-the-month percentage gain in the nation.

Over the 12 months ending in August, Georgia has added 79,300 nonfarm jobs, not seasonally adjusted, an increase of 2.0 percent ranking it ahead of the nation’s 1.8 percent growth and ranking it number 14 in job growth, tied with Indiana and Minnesota in percentage gains.

Overall, Georgia recorded 4,132,900 jobs in August. Its highest level since June 2008. It now stands only 72,700 jobs below its absolute peak in November 2007, and only 44,400 jobs below its seasonally adjusted peak in February 2008. 

In contrast, from 2007 to 2013, the Census Bureau estimates that the state’s population has risen by 447,000 people. (There is no good estimate of the state’s additional population growth from 2013 to the present.)

The nonfarm job growth numbers contrast with a rising unemployment rate for the state, which the Bureau of Labor Statistics reported as 8.1 percent in August, the highest in the nation, up from a revised 7.7 percent rate in July.

One-Month Changes, Seasonally Adjusted

In August, Construction recorded the largest one-month percentage increase rising 1.6 percent (2,400 jobs), while Manufacturing added the most jobs (5,500 or 1.5 percent) of any industry sector in Georgia.

Government added 3,500 jobs in August (0.5 percent), the largest one-month percentage increase since 2011. The sudden burst of local government hiring coincides with the start of many local governments’ fiscal year in Georgia, which often begins in July.

Losses over the month included Transportation and Utilities (-2,400 jobs or -1.2 percent), Finance (-1,800 jobs or -0.8 percent), and Wholesale Trade (-300 jobs or -0.1 percent).

12-Month Changes, Not Seasonally Adjusted

Over the 12 months ending in August, Professional and Business Services continued to be a major contributor to Georgia’s economy, adding 25,400 jobs (4.3 percent growth over the year). Other significant contributors included Leisure and Hospitality adding 16,100 jobs (3.8 percent), 

Manufacturing which added 9,900 jobs (2.8 percent), and Transportation and Utilities that added 6,700 jobs (3.6 percent) despite the drop over the month.

No industry sector lost jobs over the year, but Financial Activities (100 jobs) and Government (300 jobs) showed no percentage gain.

Education and Health Services, while adding 5,700 jobs (1.1 percent) over the year, continued to show a significant slowing from the sector’s previous growth rates reflecting slow growth earlier in the year.

Saturday, September 20, 2014

3 Measures of Georgia's Employment

Here are three views of Georgia's employment from January 2013 to August 2014

The top line is LAUS - Local Area Unemployment Statistics. This line shows the employment in the monthly household sample used to determine the state's unemployment rate. In this case, it represents seasonally adjusted data for Georgia.

The next is the CES - Current Employment Statistics. A sample of establishments conducted monthly, it measures nonfarm jobs in the state. The graph is showing seasonally adjusted data for Georgia.

The lowest is QCEW - Quarterly Census of Employment and Wages. This is not a survey but a census of all jobs in the state based on unemployment insurance reports filed by employers in Georgia. QCEW covers approximately 98 percent of jobs nationwide.

(Below on this post you can see the same chart 2009 to 2014 for a longer perspective.)

You can see that while the three surveys do not track perfectly, they do tend to move in the same direction over time. You can also clearly see the divergence between the LAUS employment figure that is starting to move downward beginning in approximately May 2014, while the CES jobs number moves upward. (There is always a delay in QCEW data, so March 2014 is the latest data available. Since it is a census, it is never seasonally adjusted.)

Because both LAUS and CES are sample surveys, each have an error rate, so it is difficult to predict which is the more valid sample at this time, although the CES sample is much larger at the state level than the LAUS.

For that and several other reasons, it is likely that the CES is a better estimate of the true movement in the economy at present.

Benchmarks in early 2015 should reconcile the two surveys and provide more accurate data.

Friday, September 5, 2014

Dropping Out of the Labor Force: August Data Surprises in a Bad Way

Today’s release of national unemployment statistics held some unwelcome surprises. Nonfarm employment rose by only 142,000. While that would have been a very good number during the recession, as BLS pointed out in their news release today, the lower number compares “with an average monthly gain of 212,000 over the prior 12 months.”

The unemployment rate came in at 6.1 percent. Actually, the rate tracked downward narrowly by 0.04875 percentage points over the month (less than five one-hundredths of a percentage point), but within a margin of error, so it was unchanged for all practical purposes.

Any movement in the rate reflected people dropping out of the labor force, as the number of employed in the household survey moved up by only 16,000 while the number dropping out of the labor force shot up by 268,000 over the month, seasonally adjusted.

I created a Not in Labor Force / Population Ratio table, and the results are interesting. Prior to the recession, about 34 percent of the noninstitutional, 16 and older population was not in the labor force. As expected, as the recession hit home, this ratio held pretty steady.

The surprise is that since the recession officially ended, the number of people not in the labor force has actually risen as a percentage of the population. In August 2014, it stood at 37.2 percent of the population.

This goes against conventional understanding of workforces and gives a significant indicator of the amount of slack still in the labor market.

You would normally expect that as people lost their jobs, some percentage of them would drop out of the labor force by taking early retirement or just giving up looking for work. As the economy recovers, you expect these people to be lured back into the labor force either by gaining new employment or becoming active job seekers (thus defined as unemployed).

Instead, people remain outside the labor force in even greater numbers today than during the recession.

Some analysts have tried to explain this behavior by describing an aging population that is retiring in larger numbers. Certainly we are seeing more retirements, but when you look at the older employed workers (55 – 64 and 65+), they are actually growing as a percentage of their respective populations.

Table 1. Employment-Population and Not in Labor Force-Population Ratios
 August 2004, 2009 and 2014

In fact, the 55 – 64 age group acted in the way conventionally expected by labor economists with individuals dropping out of the labor force during the recession and then returning to employment as the labor market improves. Those dropping out of the employed ranks are not the older workers.
All this goes to prove that there continues to be significant slack in the job market, and that the unemployment rate is an unreliable indicator of the labor market health, not because of statistical flaws, but because it no longer reflects the reality for most workers.

I try not to comment too often on the national labor statistics and stick with Georgia data, but increasingly it seems that Georgia’s economy will not fare better than at the national level, so a slowdown nationally will most likely show in Georgia as well.

With losses at the national level, Georgia will suffer its share, as the state’s economy has been unable to detach itself from the national trend and so it's economy appears to be tied to the national economy for better or worse.