Georgia follows the nation in declining unemployment rate, higher employment-population ratio for 2017

Source: U.S. Bureau of Labor Statistics

Georgia’s average annual unemployment rate declined in 2017 and was one of 17 states whose rate was not significantly different than the nation’s 4.4% average annual unemployment rate, according to newly released data from the U.S. Bureau of Labor Statistics.

Georgia’s annual average unemployment rate for decreased by 0.7 percentage points from 5.4% in 2016 to 4.7% in 2017.

Overall, annual average unemployment rates decreased in 32 states and were little changed or unchanged in 18 states and the District of Columbia.

Among the states, Alaska recorded the highest average unemployment rate at 7.2%.

Five states, Colorado, Hawaii, Nebraska, New Hampshire, and North Dakota, reported unemployment rates below 3%.

Employment-Population Ratio

Georgia’s ratio of people employed to the state’s population rose from 59.1 in 2016 to 60.2 in 2017, an increase of 1.1 percentage points.

The ratio was not statistically different from the nation’s rate of 60.1.

At the end of the 20^th Century, Georgia’s ratio was 66.8 but then declined to a low of 57.4 in 2010 before slowing climbing over the past seven years.

Georgia’s 2017 ratio exceeded the employment-population ratios of the states surrounding Georgia, including Alabama, Florida, South Carolina, and Tennessee, all of which were below 59.

The employment-population ratio is the proportion of the civilian noninstitutional population 16 years of age and older that is employed.

Economists continue to argue over whether the employment-population ratio can be substantially increased from these levels. Arguments that the ratio cannot move up significantly include an aging population and more people who have permanently left the workforce because of the effects of disability or for other reasons.

Workers protest outside of Federal Labor Department offices in Atlanta

The Southeast regional offices of the U.S. Department of Labor's Bureau of Labor Statistics were picketed on Wednesday by 81 employees who work for Office Resources Inc. (ORI), a contractor at the Atlanta offices of BLS.

The group was joined by Charlie Flemming, president of the Georgia AFL-CIO.

An online video of the protest is available here.

The ORI workers are fighting for their first union contract after joining the International Association of Machinists last year.

BLS contracts out part of its collection activities including telephone collection for their Job Openings and Labor Turnover Survey (JOLTS) and the Current Employment Statistics (CES) survey that produces national employment information.

The BLS Southeast Region handles data collection for a number of statistical surveys, including the Consumer Price Index, most of which are collected by federal employees led by long-time Regional Commissioner Janet Rankin.

While BLS is an agency of the U.S. Department of Labor, it has traditionally kept its distance from other USDOL agencies and tried to avoid controversial and political issues.

The agency describes itself as “the principal fact-finding agency for the Federal Government in the broad field of labor economics and statistics.”

The BLS mission “is to collect, analyze, and disseminate essential economic information to support public and private decision-making. As an independent statistical agency, BLS serves its diverse user communities by providing products and services that are objective, timely, accurate, and relevant.”

The BLS Director for Public Affairs was unavailable for comment.

Atlanta ranks 2nd in percentage job growth among largest metro areas in September

The Atlanta metro area added 71,500 net new jobs over the past 12 months, according to newly released seasonally adjusted data from the U.S. Bureau of Labor Statistics.

The area’s job growth translated into an annual increase of 2.8 percent, falling second only to Dallas among the largest metro areas in the nation. The Dallas area reported a 3.2 percent annual growth rate.

The growth translated into more new jobs added over the year for all but three other metro areas in the U.S. in September. Other metro areas with large over-the-year job increases included Los Angeles (+133,300), Dallas (+107,000), and New York (+104,500). The District of Columbia-Maryland-Virginia metro area came in below Atlanta, posting annual job growth of 62,800.

Atlanta Metro Area

The Atlanta area’s 2.8 percent growth compares to Georgia’s overall 2.0 percent growth rate. For the 12 months ending in September, the nation as a whole saw job growth at 2.0 percent.

While the Atlanta area added only 2,700 new jobs in September, BLS revised the area’s job growth in August upwards from a preliminary report of 600 jobs to a revised addition of 4,100 jobs.

Over the three months ending in September, the Atlanta area added 22,800 new nonfarm jobs while the rest of the state lost 1,000 jobs resulting in a net state gain of 21,800 jobs.

As a comparison, for the same three months in 2014, the Atlanta area created 24,800 jobs while the state posted 37,200 new nonfarm jobs.

Other Metro Areas in Georgia

Outside Atlanta, the Augusta area posted the fastest growing job market over the past year, rising by 2.5 percent, an increase of 5,600 nonfarm jobs over the year. Savannah showed a 2.4 percent increase, adding 4,100 jobs since last September.

The Hinesville area posted the largest job loss among Georgia metro area, losing 2.0 percent (-400 jobs). Albany lost a total of 1.8 percent (-1,100) jobs, while Valdosta reported a loss of 1.6 percent (-900 jobs).

Too good to be true? Georgia’s unemployment rate of 6.0 % in July

Rate is likely more than half a percentage point higher than reported.

Georgia’s unemployment rate fell to 6.0 % in July, the lowest since May 2008, according to seasonally adjusted data provided by the Bureau of Labor Statistics.

Unfortunately, the drop reflects people leaving the labor force in June and July rather than increase in employment.

Looking at the not seasonally adjusted data, last year Georgia’s labor force grew by 34,057 in June and July. This year, the state’s labor force actually dropped by 5,159 over the same two months. Given the state’s natural population growth rate, this seems unlikely to be due to demographic factors.

The formula used for seasonal adjustment expects a larger labor force in the summer from high school and college graduates as well young workers who are out of school for the summer. When that does not occur, it can throw off the unemployment rate.

With the non-seasonally adjusted data taking an unexpected dive, the formula resulted in a seasonally adjusted drop of nearly 30,000 people. It is as if everyone that had joined the labor force from Jan. 1 to July suddenly dropped out.

If the 30,000 people in June and July had not dropped out of the labor force but been added to the unemployed list instead, the seasonally adjusted rate would have stood at 6.6 % in July.

Why the decline in the labor force?

Explanations for the change in labor force between summers of 2014 and 205 include (1) people are leaving the state in record numbers [highly unlikely], (2) it is a statistical fluke that will be reversed in future months [somewhat likely], or (3) people not working this summer did not search for work [somewhat likely].

It is possible that over the summer, an abnormally large number of older individuals chose to retire [also highly unlikely].

More likely, younger workers who normally find summer jobs either were unable to work in the summer months or chose not to work.

There is anecdotal information that the lower labor force was due to a combination of younger workers taking additional education over the summer months rather than searching for work, as well as a lack of summer jobs this year. If younger workers knew that summer employment programs were unable to meet demand, they may have decided to not even try to find jobs.

By dropping out of the labor force rather than looking for work, the labor force shrinks, the number of officially unemployed persons falls, and the unemployment rate looks artificially low.

Looking ahead

The seasonal adjustment formula expects fewer workers in the labor force, as students return to school in August and September. This should cause the seasonally adjusted unemployment rate to rise in August and September. (Georgia schools begin classes relatively early in August, so some of the effect should show in August numbers.)

We shall look forward to see if the state’s unemployment rate turns higher in August and September that will either validate or invalidate our theory.