Friday, November 21, 2014

Georgia’s reserve labor force

In October, Georgia recorded an 11,600 job increase, while over the year the state has added 95,400 jobs, building on its previous months of job creation.

Despite these good numbers, the actual percentage of Georgians employed stood at nearly 4.4 million, accounting for 57.5 percent of the civilian noninstitutional population age 16 and older.

This compares to 67.5 percent of the population employed in October 2000 in the state.


October 2000
October 2014
Percentage of Georgians employed
67.5
57.5
Unemployment rate
3.3
7.7




Increasingly, fewer Georgians are employed or seeking work. While the number of unemployed have risen over the 14 years by 223,175, this number pales in comparison to the rise of 1 million residents who are not currently looking to be part of the labor force.

Georgia
Oct. 2000 to Oct. 2014
Population, 16 and older
+ 1,499,237
Not employed persons (Population minus Employed persons)

+ 1,241,025

Employed persons

+ 258,212
Unemployed persons
+ 223,175

Instead, they are a combination of students in school, retirees, and working-age people staying home to care for children and the elderly. Pew Research Service did an analysis at the national level and found that the majority of those outside the workforce were not the elderly, but instead young people.
These people who are outside the labor force represent potential employees. For employers, they are a potential solution to any possible labor shortages in the future.

In any case, their existence does much to explain why wage pressures are not increasing as jobs are added in Georgia.

BEA has reported that Telfair County had the lowest per capita personal income of any county in the U.S. in 2013 at $17, 536.

This low personal income is partially the result of the lack of competition for workers, which depresses wages, especially those who have undifferentiated skills and cannot command higher wages.

Think of this force of people as a reserve labor force that can be drawn upon whenever wage pressures arise.


Data from the U.S. Bureau of Labor Statistics.

Modest job growth in October shows Georgia’s continued job recovery

Georgia added 11,600 jobs in October 2014 even as the state again recorded the nation's highest unemployment rate at 7.7 percent, according to seasonally adjusted data released by the U.S. Bureau of Labor Statistics. In comparison, the U.S. recorded a 5.8 percent unemployment rate in October.

October numbers are important as they are connected to hiring patterns for the large Christmas season. Taking out the seasonal adjustment factor, the state added 33,800 jobs this year compared to an average of 19,300 jobs in each October from 2003 to 2013. If the pattern holds, then November should continue to see some modest improvement in jobs as well.

Over the year, Georgia has added 95,400 jobs, an increase of 2.4 percent, outpacing the nation in job creation, and rising to the 10th best job creation performance among the 50 states.

State
12-Month Percentage Job Increase
Oct. 2013-Oct. 2014
North Dakota
5.0
Utah
3.8
Texas
3.7
Delaware
2.9
Oregon
2.8
Florida
2.7
Arizona
2.5
Colorado
2.5
Georgia
2.4

The numbers indicate that the Georgia job market continues its recovery, while still below its pre-recession peak and with a sizable portion of potential workers still not holding jobs. That continued slackness in the workforce continues to explain the lack of pressure on wages, as workers have little bargaining power except in specialized areas such as technology niches.

In keeping with the upcoming holiday season, Retail Trade added 1,700 jobs in October. Over the year, the sector has added 9,000 jobs, seasonally adjusted.

Business and Professional Services, which had suffered slow and even decline in August and September snapped back by adding 5,400 jobs over the month. Since October 2013, the sector has added 33,200 jobs. 

Since the majority of this sector tends to be located in urban areas, the good numbers indicate that the metro areas, especially the Atlanta area, continue to account for much of the statewide growth.

Construction added 1,600 jobs over the month contributing to an 8,500 jobs increase over the year, which is still modest compared to large losses suffered during the recession.

The state’s unemployment rate actually dropped from 7.9 percent in September, although rates in other states also declined. Following Georgia, Mississippi recorded the second highest rate at 7.6 percent.



Data supplied by the U.S. Bureau of Labor Statistics.

Thursday, November 6, 2014

Was Georgia’s unemployment rate overhyped in the election?

Georgia currently has the highest unemployment rate in the nation at 7.9 percent, although this is down from 8.1 percent in the previous month. 

Despite the widespread announcement of these numbers, the rate seemed to have little effect on the mid-term elections in the state.

Governor Deal, Labor Commissioner Butler, and now-Senator Perdue saw little damage by the high advertised rate as voters chose to “stay the course.”

The answer may be in the state’s rising job numbers. Despite the high unemployment rate, the number of nonfarm jobs in the state are up 2 percent over the year, above the nation’s 1.8 percent rise.

With the number of jobs growing and more workers employed, their optimism more than made up for the frustrations of those still unemployed. 

While the mystery of the disappearing workforce continues as the labor force fails to grow as fast as the estimated population, the Georgia economy may continue to show higher than usual job slackness and lower than usual labor force participation. This will place a drag on wages, but may well become the new normal for the state.

As always, the lesson remains that it is important to look at more than one source of data to get an accurate picture of an economy.

Georgia nonfarm Employment, 12-month percentage change, not seasonally adjusted
Data from U.S. Bureau of Labor Statistics