Friday, July 29, 2022

The money illusion in the South: Employers raise wages, but retail prices continue to rise faster

 Employment Cost Index - 12-month increase

Private Industry Workers' Wages and Salaries in the South

Current Dollars


Constant Dollars

Private industry costs for wages and salaries in the South rose 2.2% for the 2nd quarter (April-June) 2022, according to new information provided by the U.S. Bureau of Labor Statistics.  The increase occurred following increases of 1.0% in the 1st quarter of 2022 and 0.7% in the 4th quarter of 2021.

Over the past 12 months, southern employers’ payout of wages and salaries has risen 5.9%, the largest percentage increase in the series, which dates back to 2001. For private sector workers in the Atlanta-Athens area, the 12-month increase was 4.4%.

In comparison, nationally, private industry wages and salaries rose 1.6% in the 2nd quarter following increases of 1.4% and 1.0% in the previous two quarters.  Over the past year, employers’ cost for wages and salaries rose 5.7% for the nation.

Adjusting for inflation

While employer wage costs rose, they continued to fall behind the inflation rate of retail prices. Southern employers in private industry saw their costs for wages and salaries decline 1.0% over the quarter and 3.6% over the year when the dollars were adjusted for inflation.

For the U.S., private industry employers saw wages and salaries drop 1.4% over the quarter and decline 3.1% over the past 12 months when including adjustment for inflation.

Using another way of expressing the change over time for wages and salaries of private industry workers in the South, over the past 10 years, nominal (before inflation adjustment) wages have increased 31.3%.

Including the impact of inflation, this increase falls to a 1.8% cumulative increase over the past decade.

 Money illusion

One of the insidious effects of inflation is that workers see increases in their paychecks and feel wealthier even as their purchasing power declines. As a result, workers continue to spend based on their increasing nominal wages even though they are actually able to purchase less. This continuing propensity to spend actually contributes to inflation remaining elevated for a longer time period.

Only when inflation hits high levels will workers adjust their spending and/or begin to demand higher wages to compensate for their declining purchasing power.


Friday, July 22, 2022

Georgia headline unemployment rate under 3% as the state continues to post solid growth numbers

Georgia’s June unemployment rate came in at 2.9%, statistically not a significant change from last month’s 3.0% rate, but one that will be noted by most of the media as the lowest unemployment rate in the state going back to the beginning of the series in 1976.

In the state’s news release, Georgia Labor Commissioner Mark Butler is quoted: "We have never seen an unemployment rate below three percent," said Commissioner Butler. "The unemployment rate is decreasing exactly the way it should in a strong economy. We are adding new job seekers and they are quickly finding employment."

Labor Force

The state’s labor force grew by 8,103 people in June. Contributing to the state’s 2.9% unemployment rate was an increase of 10,420 people employed while 2,317 fewer people were counted as unemployed. The labor force participation rate (62.3) and the employment-population ratio (60.5) remained unchanged over the month. Both rates remained slightly below the levels they reached at the end of 2019.

Jobs

Georgia added 18,100 nonfarm jobs in June, roughly in line with additions in March, April, and May. Of those new jobs, 15,000 were in the private sector and 3,100 were in government. The showing in government was the best one-month net new job growth since June 2020.

Since June 2021, the state has seen the addition of 246,300 jobs for a growth rate of 5.4%. Of those, 238,000 have been in the private sector.

Job growth among sectors was nicely distributed with health care and social assistance jobs in Georgia growing by 3,700 over the month, professional and business services employment rising by 2,800, the manufacturing sector adding 2,500, leisure and hospitality employment increasing by 2,500, wholesale trade jobs increasing by 2,200, and state government adding 2,000 jobs.

Construction industry employment continues to disappoint. In June, jobs in the sector were down by 400. Although constructions jobs grew by 1,100 in May, they fell by a total of 6,200 between February and April. Over the past 12 months, construction jobs in Georgia have declined by 200 even as other sectors post rapid growth.

Wednesday, July 20, 2022

Job openings down in May for Georgia, as inflation rises in the Atlanta area in June

Two new reports from the U.S. Bureau of Labor Statistics paint a increasingly tough atmosphere for workers in Georgia. A decline in the number of job openings means fewer opportunities for workers to improve their economic position, while rising prices will squeeze their incomes.

Job openings in Georgia

Job openings in Georgia dropped by 69,000 between April and May 2022 to 367,000. In comparison, the state recorded 436,000 in April and 365,000 openings in May 2021.

The job openings rate in the state dropped from 7.4 in May 2021 to 7.1 in May 2022. The job openings rate peaked at 8.4 in August and October 2021 and again in February and April 2022.

If the number of workers choosing to quit offers an insight to workers' psychology, the number of job openings offers a similar insight to employers. A reduction in the number of openings indicates that employers in Georgia are less optimistic about their future business prospects.

While the number of job openings declined, the number of hires, quits and layoffs were virtually unchanged over the month.

Inflation

Consumer prices in the Atlanta area rose by 2.4% between April and June and increased 11.5% in the 12 months ending in June.

For the nation, consumer prices increased 2.5% for the two months ending in June and rose 9.1% over the past 12 months.

The 12-month increase was the largest recorded for the Atlanta metro area since BLS began posting bimonthly data in 1999. As a contrast, in January 2021 the Atlanta area recorded a 12-month increase of 2.4% compared to the current two-month increase with the same percentage change.

In June, food prices in the Atlanta area rose by 2.1%, over two months as costs for food at home increased 3.0% and food away from home moved up by 1.0%. Over the past 12 months, food prices increased 10.1%.

Housing costs increased 2.5% over the previous two months with rents increasing 2.7%. Over the past year, housing costs in the Atlanta area have risen 11.0% with rents increasing 12.2%.

After increasing in January, apparel costs have declined in each of the past four months with the apparel index posting a 6.9% decline in the two months ending in June. With those recent declines, the index has increased 4.8% over the past year.

Transportation costs rose 6.1% in June with the index increasing 23.8% over the previous 12 months, almost the same percentage increase recorded for the index in the 12 months ending in June 2021. Combined, the transportation index in the Atlanta area has risen 53.3% since June 2020.

Gasoline cost increases were a major contributor to the rise in transportation costs with gasoline costs rising 16.3% in the two months ending in June and increasing 50.8% over the past year. Since June 2020, gasoline costs in the Atlanta area have increased 140.3%.

Costs for all items less and food and energy in the Atlanta area increased 1.5% for the two months ending in June. The index rose 9.7% over the past 12 months.

The index for all items less food and energy in the U.S. increased 1.3%, while the 12-month increase was 5.9%. 

Friday, July 1, 2022

Georgia Department of Labor asks to withdraw from settlement agreement to fix delays in unemployment benefits

UPDATE July 6, 2022: Georgia Department of Labor has asked to withdraw from the settlement with the Southern Poverty Law Center regarding a lawsuit stemming from delays in the payment of unemployment benefits during the COVID-19 epidemic. Georgia DOL argues that the SPLC has violated provisions of the settlement agreement.

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Georgia Department of Labor agrees to fix delays in unemployment benefits

From the Southern Poverty Law Center (SPLC): 

“A state judge in Georgia signed off on the preliminary settlement of a lawsuit against the Georgia Department of Labor over extreme delays in the payment of unemployment benefits during the COVID-19 pandemic. 

Under the settlement, the GDOL will make multiple improvements to its current system of processing unemployment claims to deal with the extreme delays that have plagued the state agency since the beginning of the COVID-19 pandemic. The pandemic led to devastating levels of unemployment in Georgia. At its peak, unemployment in Georgia rose to 12.6%, and some individuals have been waiting for appellate rulings for years.  

“While GDOL claims there is no current backlog in making payments for unemployment benefits, we know there are still hundreds of thousands of people waiting for their appeals to be heard, with many having no idea when their appeals will occur,” said Jamie Rush, a senior staff attorney for the SPLC Economic Justice Project. “The changes agreed to in this settlement should allow people to get their claims and appeals processed quicker while keeping them informed about what is going on.”  

The lawsuit, filed in 2021, sought to address the systemic issues at the GDOL that resulted in the massive backlog and extreme delays in determinations, payments and appellate decisions. At that time, hundreds of thousands of people were waiting for their unemployment claims to be processed or an appeal to be heard.” 

GDOL Response 

In response, Georgia Labor Commissioner Mark Butler claimed that GDOL was already working on fixes to the program that would have occurred even without the lawsuit. 


You can read more about the settlement terms on the SPLC website.