Showing posts with label economic development. Show all posts
Showing posts with label economic development. Show all posts

Saturday, April 18, 2020

Georgia’s labor market tells a tale of two surveys in the 1st quarter of 2020


Georgia Unemployment Rate, 2018-March 2020, seasonally adjusted
Georgia posted meager 1st quarter employment growth but not due to the coronavirus based on a survey of establishments in the state, while the household survey showed definite signs of the impact of the coronavirus on labor activity.

The State of Georgia gained 5,000 jobs in the 1st quarter of 2020, an 85% decline from its job gains in the 1st quarter of 2019 according to the survey of businesses and government agencies.

At the same time, the state’s unemployment rate remained at 3.1% in January and February before jumping to 4.2% in March a rate not seen in the state since 2018.

The Georgia governor’s “stay-at-home” order was not effective until April 3rd, so the small job gains must be attributed to a general slowing of the state’s economy rather than to the effects of the state’s order.

It is possible that some people were curtailing their economic activities even before the order became official resulting in a slowdown and layoffs, which may account for the increase in the number of unemployed reported in the household survey.

Establishment survey

All three months (January, February, and March) showed smaller results than for the same months a year ago.

The Atlanta metro area gained 2,200 jobs over the quarter that includes a 500 job gain in the month of March. The 1st quarter gain represents a 92% decline from the 1st quarter of 2019 when the area recorded increases of more than 27,000 jobs.

The other 12 metro areas in the state combined to a net loss of 900 jobs in the 1st quarter compared to a gain of 3,000 in the 1st quarter of 2019.

The trend in the numbers along with the fact that the Atlanta area posted a job increase in March despite illnesses associated with Covid-19 in the metro area indicates that the survey of businesses and government agencies did not reflect any effects from the coronavirus in the establishment survey.

Establishment survey by industry

Health care and social assistance posted a 6,000 job increase over the quarter, slightly below the 6,500 job gain in the 1st quarter of 2019.

The increase was partially offset by a 1,700-job loss in the leisure and hospitality sector and a 1,300-job loss in manufacturing. Professional and business services remains the largest sector in the state despite having a net loss of 200 jobs over the quarter.

Establishment survey by area

After Atlanta, the Augusta area posted the next highest job gain among the state’s metro areas, adding 900 jobs in the 1st quarter of 2020.

Areas posting significant job losses included Valdosta (-900), Dalton (-700), and Athens (-700).

Employment/unemployment

In contrast to the establishment survey that serves as the basis for the jobs data, the household survey told a very different story for the first quarter of the year.

In March, the number of unemployed in the state rose by 55,442 to a total of 216,589 people as compared to 187,625 in March 2019.

The number of employed persons dropped by 77,876 people according to the household survey, with a net loss 22,434 people listed as dropping out of the labor force.

As a result, the labor force participation rate declined to 62.1%.

Effects of the coronavirus on Georgia’s labor market

The state was relatively slow in implementing procedures to mitigate the effects of the coronavirus, which explains the small effect on 1st quarter job growth.

For example, the arts, entertainment, and recreation sector, which is expected to experience a steep decline in employment due to the closing of many nonessential activities during the stay-at-home period, showed an employment increase of 1,500 jobs in the 1st quarter including a 400 job rise in the month of March.

It is expected that when the April establishment employment numbers are reported most of the industries and areas in the state will show significant declines compared to the 1st quarter of the year, and the state’s unemployment rate will continue to climb.

Whether these employment declines continue through the 2nd quarter depends on both how long the state’s stay-at-home order remains in place, and how confident people feel about returning to their normal activities.

Monday, October 10, 2016

Hurricane Matthew’s impact on workers in Georgia? Low-wage service workers will be hit worse than others

Conventional wisdom would say that the hurricane will show few long-term effects on overall earnings but that certain groups of workers will be affected more severely than others.

Low-wage workers in service industry jobs in the affected areas, such as Savannah, will see a decline in their income for the year.


Hurricane Matthew was felt severely in the coastal counties of Georgia. Required evacuations in Chatham County (Savannah) and other counties disrupted some of the fastest growing parts of the state.

In some respects, the disruptions were minimized by the storm coming at the end of the week. Nevertheless, Chatham County schools, which can be seen as a proxy for area’s return to “normal,” were not to reopen until Wednesday, October 12.

Looking at impact, it is tempting to see the disruption as causing a major economic blow to coastal Georgia, and to a less extent, the entire state, but this overstates the true impact.

Looking at impact, it is tempting to see the disruption as causing a major economic blow to coastal Georgia, and to a less extent, the entire state, but this overstates the true impact.

But it is important to note that while overall impact may be minimal in most areas, the effect on earnings will vary for different groups of employees. Low wage employees who do not hold occupations needed for cleanup and recovery will not be able to make up wages lost during the natural disaster, while those employees who do have skills needed for repair and restoration activities should see a net increase in their earnings as the increased recovery work more than offsets the loss of wages caused by the temporary shutdown of businesses during the event.

What conventional wisdom tells us

Here is the conventional wisdom when it comes to dealing with the effects of a natural disaster such as Hurricane Matthew:

Prior to the event, business picks up as consumers and businesses purchase additional supplies in anticipation of shortages. These include food and fuel.

When the event causes evacuations, people leave the affected areas. Within the affected areas, business slows, while there is an increase in economic activity in the areas receiving the evacuees.

After the event, people return to the areas previously evacuated, and economic activity increases above the normal level as people spend money and effort to restore the areas to their pre-event levels.

Over the medium term, the dip in economic activity is cancelled out by the higher-than-usual rise in economic activity post-event.

Depending on the amount of post-event activity, the natural disaster can result in an overall boost to the local economies as they receive an influx of assistance from outside sources such as state governments and the federal government.

By all appearances, Hurricane Matthew should fit this model: Short-term disruption but no longer-term impact.

Effects on workers’ income in affected areas

For workers, the effect of a natural disaster depends, somewhat, on their type of employment. Hourly workers lose income because businesses close during the natural disaster. The cleanup period benefits hourly workers who work in industries that assist in repairing and restoring areas to their pre-event level. This includes construction workers and those in the utility industry who find increased demand and benefit from working more hours and receiving overtime pay.

Low-wage workers in other industries, such as hospitality workers or hourly school employees, suffer longer dips in their pay. They lose income during the time of the natural disaster as businesses slow or shut down temporarily. After the event, businesses in industries such as tourism and hotels, and even higher-end restaurants, find reduced economic activity and so workers in those industries continue to feel the effects.

In most all industries, salaried workers continue to be paid during this time, so their income loss is less. Their income levels feel neither the effect during the event nor see a particular boost after the event.

Workers paid on commission, such as sales workers, lose that business during the natural disaster and even, to some extent afterwards, as cleanup takes precedence over new purchases. Some purchases are postponed, so they are pushed to a future date, while other purchases are cancelled and are never regained.

Effects on workers’ income outside affected areas

For areas taking in evacuees, it means an unexpected but welcome increase in economic activity. These unexpected “guests” purchase goods and services, including hotel rooms, food, and gasoline causing extra work in these areas and creating demand that translates into additional wages for hourly workers in meeting their needs.

Workers in the areas taking in evacuees see a wage “bonus” from the extra demands resulting in a temporary boost to their earnings. When evacuees return to their home areas, this demand slows and earnings return to more normal levels.

Summary

Hardest hit will be low-wage workers who lost wages during the natural disaster and who do not have jobs related to the subsequent cleanup. Those workers suffer a decline in earnings that will not be recovered.

Workers who have skills related to repair and restoration of areas affected by the natural disaster will see a net gain in earnings as work lost due to the natural disaster is more than offset by additional work caused by recovery operations.

While the actual economic impact will not be known for months, maybe for a year, it will be interesting to economists to see how the real impact measures against “conventional economic wisdom”.

It is important that policymakers understand that while the overall impact may not be significant, you cannot overlook how individuals’ earnings are affected by such events.


Monday, September 26, 2016

Does Georgia’s slower job growth in August mean less employment in December?

Employment tends to follow seasonal variations. These variations are well known and re-occur annually allowing the Bureau of Labor Statistics to adjust their job numbers by making seasonal adjustments.

Take out those seasonal adjustments and you can see that Georgia’s job growth in August was the slowest in six years.

While Georgia added 20,300 nonfarm jobs over the month, this number falls way below the 33,300 jobs added in August 2015. Not since 2010, when the state recorded a rise of 16,000 jobs, has Georgia experienced such a slow August in job creation.

Job growth in Georgia during August, 2006-2016
Despite the state’s unemployment rate dropping to a seasonally adjusted 4.9 percent rate, the employment picture was not as positive as expected.

State’s 12-month job increases declining

While Georgia continues to outpace the nation in job growth, that trend is slowing, which becomes a worrying sign of a potential slowdown in the state.

For the 12 months ending in April, Georgia saw 137,700 net new jobs created in the state. Since then, the 12-month increases have fallen each month, and in August, the 12-month increase was only 107,500 new jobs.

Number of jobs created in Georgia over the previous 12 months, January - August, 2016
It could be that employers are having a rougher time finding skilled workers without wanting to raise wage rates, or companies may be more cautious in their hiring; but for whatever reason, Georgia continues to create new jobs but fewer of them.

Trend not the same for the nation

The drop-off in new jobs did not extend to the nation. The U.S. added 224,000 new jobs (before seasonal adjustment) in August, 25,000 more than recorded for the same month in 2015, although this was fewer than in the month of August for the years 2011 to 2014.

Over the 12 months ending in August, the nation recorded a job growth increase of 1.7 percent (before seasonal adjustment), less than the 2.0 percent growth rate recorded in 2015 or the 1.9 percent rate in 2014, but equal to the growth rates recorded in August 2012 and 2013.

The drop-off in Georgia does not appear to be part of a significant national trend, at least not yet.

Problem is Georgia’s job market outside Atlanta

A key component for Georgia is the Atlanta metro area, which is home to more than 60 percent of the state’s nonfarm employment.

In August, the Atlanta metro area grew by 14,500 jobs, fewer than for the same month in 2015, but representing about 71 percent of the state’s new jobs, way above their normal percentage.

That says that the slowdown is being felt more widely in the rest of the state than in the Atlanta metro area, which is why the slowdown may not be as visible in metro Atlanta.

Slow metro growth continues in Augusta, Columbus, Dalton, Hinesville, and Warner Robins.
In these areas, new job creation is slower than both statewide and the nation, most likely for a variety of reasons including the desire of high-tech and service industries to locate in the Atlanta metro area where the larger percentage of a higher-educated workforce is available, as well as other amenities such as public transportation and cultural opportunities.

Savannah remains a bright spot with 12-month growth at 4 percent, as its combination of port-related activities, professional and business services, and tourism makes it a regional hub.

What does this have to do with December?

Although we tend to connect job growth with a burst each year around the Christmas season as retailers add seasonal hires in November, August is actually a bigger month for hires than November or December in Georgia.

With the exception of 2009, the August job growth number in Georgia has been larger than the comparable number for November or December in that same year since the beginning of the century.

If that trend holds for this year, Georgia’s relatively small 20,300 August job growth will mean a relatively smaller job market in November and December.

While some retailers and fast-food operators might be worried about seasonal hires this year, overall, the job market may not be as tight as anticipated, although wages above the $7.25 mark may still be necessary to entice workers given the ongoing Fight-for-$15 movement.

Workers may find low-paying seasonal jobs in November and December in the $9-$10 range, but better-paying career positions might be harder to find in Georgia, and especially outside the Atlanta metro area, if these trends persist.

For job seekers, the message is to find that new position now and not hope that a tighter job market might raise wages later in the year.

For state policymakers, they should not be complacent about job creation outside the Atlanta metro area. In many smaller metro areas of the state, and for rural areas, the future does not look as bright.

Wednesday, May 18, 2016

Time for Georgia to take a positive approach to labor development

Low wages, pay equity, public assistance, and drug use are related issues for Georgia.

This month, a series of reports have been published concerning Georgia’s labor force, most of them negative. The UC Berkeley Center for Labor Research and Education published a study titled “Producing Poverty: The Public Cost of Low-Wage Production Jobs in Manufacturing”. 

In it they found that 47 percent of production workers in manufacturing and temporary services relied on some form of public assistance:


Earned Income Tax Credit
Medicaid/CHIP
Food Stamps
TANF
Total Participation
Georgia
39%
15%
22%
1%
47%
(Some workers participate in more than one public assistance program.)

The study also provides an explanation for these high rates of public assistance. “Historically, blue collar jobs in manufacturing provided opportunities for workers without a college education to earn a decent living. For many manufacturing jobs, this is no longer true. While employment in manufacturing has started to grow again following the great recession, the new production jobs created are less likely to be union and more likely to pay low wages. When jobs do not pay enough for workers to meet their basic needs, they rely on public assistance programs to fill the gaps,” according to the report.

This past Tuesday, the U.S. Department of Labor issued its new rules for overtime. In a map accompanying the announcement, USDOL indicated that the updated protections would extend protections for an additional 158,000 workers in Georgia. This in a state where 4.4 percent of workers were already at or below the minimum wage, a figure much higher than the national average.

The American Association of University Women published a study showing the median earnings for men and women across the nation. In Georgia, the gap was widest in Congressional Districts 6 (Price, R-GA) and 11 (Loudermilk, R-GA). In the 6th Congressional District, women earned on average 27.4 percent less than men. In the 11th Congressional District, the difference was 25.8 percent. This compares to a 21 percent gap nationally.

Georgia Congressional Districts with widest earnings gaps between men and women (2014)
Member of Congress
District
Earnings Ratio
Price (Republican)
GA-6
72.6%
Loudermilk (Republican)
GA-11
74.2%
Scott, A. (Republican)
GA-8
75.6%
Westmorland (Republican)
GA-3
76.3%
Hice (Republican)
GA-10
77.0%



As it happens, the two Congressional districts are side-by-side, with the 6th District including much of the northern suburbs of Atlanta including portions of Cobb, Fulton, and Dekalb counties. The 11th District is located in the northwestern part of the Atlanta metro area and includes Cartersville, Marietta, and Woodstock proving that the worse problems were not just in the traditionally rural parts of South Georgia.

Finally, The New York Times published a story this week on “Hiring Hurdle: Finding Workers Who Can Pass a Drug Test.” In the story, Georgia officials and company managers were dismayed to find that companies in Georgia are having trouble finding workers due to the number who fail company drug tests.

Taken individually, the stories can be read as a series of “what’s wrong with Georgia”, but they should not be read as unrelated issues.

Low wages, low rates of unionization (only 4 percent of workers in Georgia are members of unions), and significant problems in pay equity between men and women feed on each other. The results show up as social problems including greater need for public assistance and greater drug use.

Georgia has done an excellent job of luring companies, and most recently the film industry, to the state. Now they need to commit to raising their labor force, not by creating more rules and barriers but by taking a positive approach to developing its workforce by supporting efforts at great pay equity and higher wages for both men and women even if that means taking a less confrontational approach towards unions. 

The same positive approach Georgia officials take to economic development should be applied to labor development.






Thursday, February 11, 2016

Union membership declines in Georgia in 2015

Georgia lost 8,000 union members in 2015, even as the state gained wage and salary workers, according to data recently released by the U.S. Bureau of Labor Statistics.

In 2015, the number of wage and salary workers in Georgia grew from 3,926,000 to 4,016,000 while union membership dropped from 170,000 to 162,000. As a result, the percentage of union members in Georgia’s workforce fell from 4.3 percent in 2014 to 4.0 percent in 2015.

Percentage of wage and salary workers in Georgia 
belonging to unions, 2000 to 2015
Georgia recorded the fourth lowest union membership percentage among the 50 states in 2015.

States with the lowest percentage of
wage and salary workers belonging to unions in 2015

2014
2015
South Carolina
2.2
2.1
North Carolina
1.9
3.0
Utah
3.7
3.9
Georgia
4.3
4.0
Texas
4.8
4.5

In 2000, the union membership rate in Georgia was 6.5 percent, and there were 237,000 union members.

For the nation, the union membership rate--the percent of wage and salary workers who were members of unions--was 11.1 percent in 2015, unchanged from 2014. The number of wage and salary workers belonging to unions, at 14.8 million in 2015, was little different from 2014. In 2000, the union membership rate was 13.4 percent, and there were 16.3 million union workers.

Looking at nearby states, both Alabama and South Carolina posted declines in the percentage of union members. Alabama’s percentage of union members shrank from 10.8 in 2014 to 10.2 in 2015. South Carolina’s percentage fell slightly from 2.2 to 2.1 percent.

The story was different in Florida where, in contrast to Georgia, the percentage of wage and salary workers belonging to unions in Florida grew by 91,000 over the year even while total wage and salary employment decreased by 48,000. As a result, the percentage of union members rose from 5.7 percent in 2014 to 6.8 percent in 2015.

Data on union membership are collected as part of the Current Population Survey (CPS), a monthly sample survey of about 60,000 eligible households that obtains information on employment and unemployment among the nation's civilian noninstitutional population age 16 and over. There is about a 90-percent chance, or level of confidence, that an estimate based on a sample will differ by no more than 1.6 standard errors from the true population value because of sampling error. BLS analyses are generally conducted at the 90-percent level of confidence. The state data preserve the long-time practice of highlighting the direction of the movements in state union membership rates and levels regardless of their statistical significance.


Tuesday, January 26, 2016

Georgia celebrates a strong 2015 job market, with the Atlanta metro area remaining the key to the state's future


Georgia ended 2015 with the 3rd fastest growing job market among the largest 11 states in the nation, those with a job market of 4 million or more nonfarm jobs, according to the U.S. Bureau of Labor Statistics.

Georgia posted a 2.2 percent rise in calendar year 2015 following only California and Florida, which each posted increases of 2.9 percent.

While Georgia added only 3,300 jobs in December, it averaged nearly 7,600 new jobs each month over the past year for a total of 91,100 net new jobs.  In contrast, California added the most new positions among the 50 states in 2015 at 459,400, followed by Florida, which added 233,100 new jobs.

Of the 11 largest states, only Illinois showed a decrease with a net loss of 3,000 jobs over the year.

Together, the 11 largest states accounted for more than 55 percent of the nation’s new jobs (1,459,900 compared to 2,650,000 nonfarm jobs nationally) with a combined job creation rate of 1.9 percent, equal to the nation’s rate.

5-year recovery from recession

Georgia nonfarm jobs, 2000 - 2015, seasonally adjusted
Despite a slow rebound from the 2007-2009 recession, Georgia has rapidly added jobs over the past three years resulting in a five-year growth spurt of 441,800 jobs. This has resulted in an 11.4 percent rise in its nonfarm employment and places it 4th among the fastest growing large states in the nation.

Other large states with significant five-year growth rates include California (14.2 percent), Texas (14.1 percent), and Florida (13.9 percent).

Large states have been significantly outperforming states with smaller populations since the end of the recession. Since the end of 2010, the 11 largest states have captured 60 percent of the net new nonfarm jobs in the nation.

Atlanta remains a key component of Georgia’s job engine

In 2015, the Atlanta metro area added 77,000 of the state’s 91,100 net new jobs, accounting for 84.5 percent of the state’s growth even as the area is home to approximately 60 percent of the state’s total nonfarm jobs.

Since the end of 2010, the Atlanta metro area has seen the addition of 338,200 jobs, which represents more than 75 percent of all the new jobs in the state.

A good example of the importance of the metro area to the state is in December’s numbers, where the Atlanta metro area’s 200 job decline resulted in a slowdown in the state’s job growth to only 3,300 net new jobs. Without a robust Atlanta economy, the rest of the state cannot maintain job growth by itself.

The drop-off in the Atlanta job market last month was the first time the area had noted a job decrease in a December since 2009.

Wednesday, November 18, 2015

Education in Georgia: The first test results are not encouraging

Georgia has released its first set of test results from its new Georgia Milestones Assessment System.


The tests are meant to give educators and parents a better idea as to how well students are being prepared for their futures. The new tests replace the state’s old Criterion-Referenced Competency Test (CRCT).

According to Georgia State Superintendent Richard Woods, “Under the CRCT, Georgia had some of the lowest expectations in the nation for its students. Too many students were labeled as proficient when, in reality, they had not fully mastered the standards and needed additional support. That hurt our kids, who need to be competitive with others across the country and hurt our teachers by making it difficult for them to have a true picture of the academic strengths and weakness of their students.”

While it is commendable that Georgia take a stronger interest in preparing its students for a competitive global workplace, the results from this first set of tests are not encouraging.

Using four levels of performance, students needed to score in one of the top two levels to show they were ready to advance to the next grade. For those subjects showing the best results (biology, U.S. history, and economics/business) at the high school level, fewer than 40 percent of students were ready to be promoted to the next grade level.

In mathematics, 38 to 39 percent of students across the state in the 3rd, 4th, and 5th grades were ready to be promoted. Unfortunately, this dropped down 34 percent when high school students were tested on their knowledge of coordinate algebra, and dropped to 33 percent when they were tested on analytic geometry.
Source: Georgia Department of Education

In English and language arts, the results were slightly better with 38 percent of 9th grade students passing literature and composition and 35 percent of high school students passing American literature and composition.

Employers consistently complain that new workers lack the skills needed to be productive. Companies are reluctant to spend the money to train workers knowing that once trained, these same workers can leave for better paying jobs.

That leaves it up to the state and individuals. If Georgia wants to compete in a global economy, the state has two choices. It can better prepare its future workforce for jobs that will demand greater verbal and mathematical skills, or it can continue to rely on attracting better trained workers from out of state as it has over the past decades. For example, in Atlanta, the engine of Georgia’s job growth, only a little more than half of its residents were born in Georgia.

The problem with this second approach is that it must then compete with the other 49 states, as well as other nations, to both attract companies to the state as well as people to staff those positions when they come to Georgia. The result can be a very expensive form of economic development; more expensive than building a world-class education system.

The role between education and economic development is clear. As a first step that recognizes the importance of education to the state’s economy, the Georgia Department of Education has hired an economic development specialist to work with business executives. It is a good start, but preparing students for those jobs by giving them the needed skills is vital.

Now that we have a more honest assessment of future employees’ skills, it is up to everyone in the state to choose whether to take the challenge or hope for the continued importation of skilled labor to meet Georgia employers’ future needs.