Showing posts with label august unemployment rate. Show all posts
Showing posts with label august unemployment rate. Show all posts

Sunday, September 27, 2020

Georgia’s reported Unemployment Rate decline is misleading

Georgia Labor Force, not seasonally adjusted, January 2019 to August 2020

Source: U.S. Bureau of Labor Statistics

Georgia reported its August employment figures and highlighted a decline in its unemployment rate from 7.6% in July to 5.6%, after seasonal adjustment. The state headlined the claim that Georgia had achieved the seventh lowest unemployment rate in the nation.

Analyzing the data, a truer picture appears that is less positive than the overly optimistic story put out by the Georgia Department of Labor.

Unemployment rates in Georgia declined in August 2020, not because people found work, but because large numbers of people gave up searching for a job.

Even a cursory analysis would show that after seasonally adjusting the data, Georgia saw employment rise by 21,000 over the month, too few to account for the large decline in its unemployment rate.

Counting workers before seasonal adjustment, the actual number of people with jobs actually declined over the month by more than 12,000, while the number of people working in August 2020 fell by more than 303,000 below the number recorded 12 months ago.

Labor Force Statistics

The U.S. Bureau of Labor Statistics defines the labor force to include all people age 16 and older who are either working or actively seeking work.

Statewide, Georgia’s labor force dropped by more than 128,000 over the month, according to information provided by the Georgia Department of Labor, Workforce Statistics & Economic Research. This decline in the labor force accounted for most of the drop in the unemployment rate.

Georgia’s lower unemployment rate compared to other states can be explained by the higher percentage of people in Georgia who gave up their job search.

Georgia recorded a 2.5% decline in its labor force in August. Nationwide, the number of people leaving the labor force declined by 0.25%.

Compared to August 2019, the state’s labor force declined by more than 203.000, which translates to a 4% drop. The nation’s labor force fell by 1.8% over the past 12 months.

Georgia’s population continues to increase so it is unlikely that those leaving the labor force also left the state. More likely, people became discouraged about their job prospects and decided to stop looking for work.

Georgia’s Metro Areas

All metro areas in the state reported decreases in their labor force compared to July and a year ago.

The Atlanta metro area is the largest job market in the state and recorded the largest decline in its labor force, dropping by more than 87,000 over the month and declining by more than 114,000 since last August.

The Dalton area, with its heavier reliance on manufacturing, recorded the largest percentage drop in August, down 3% over the month.

Brunswick MSA reported the largest over-the-year percentage labor force decline with a drop of more than 13%.

Georgia’s Regional Commissions

The state has set up 12 regional commissions to assist local governments in areas such as workforce devlopment. 

Among the commissions, the Atlanta Regional Commission, which includes the city of Atlanta and surrounding counties, recorded the largest labor force drop with a decline of more than 71,000 from July to August and a drop of more than 81,000 from August a year ago.

The area covered by the ARC accounted for 55% of the decline in the state’s labor force, even though it is home to 47% of the workers included in Georgia’s labor force numbers.

Over the month, the Three Rivers Regional Commission, which includes counties in West Central Georgia, recorded the largest percentage drop, down more than 3%.

Compared to last year, the Central Savannah River Area Regional Commission reported the largest decline, down more than 5.5%. The CSRA covers 13 counties in the eastern part of Central Georgia.

Dangers in using data in a misleading manner

Information, such as unemployment rates, are important economic indicators that help guide local, state, and national policymakers in their decisions affecting the economy.

When the numbers are misread or intentionally misreported, it can skew economic decisions regarding taxes, social programs, and economic development plans.

Decision makers and the public need a clear understanding of the current economic situation and providing misleading interpretations of the information available can result in poor economic decisions that damage the state’s future.

Georgia Labor Force estimates are available here.