Georgia keeps adding jobs, but lower paying ones

Georgia added 5,900 jobs over the first four months of 2019, and an additional 2,600 in May, according to preliminary seasonally adjusted employment statistics from the U.S. Bureau of Labor Statistics.

If you graph out the results, as shown below, the job numbers look positive, if a bit sluggish compared to previous years. All in all, a bit of a slowdown and perhaps a "leveling-off" but not a decline.

Georgia Nonfarm Jobs, January 2018 to May 2019, seasonally adjusted

Source: U.S. Bureau of Labor Statistics

Look closer under those numbers, and the statistics are both more revealing and less positive for the state’s economy.

Higher Paying Industries Losing Workers

In 2018, the industries with the highest average salaries in the state were Information ($96,810), Financial Activities ($84,636), and Wholesale Trade ($76,681).

These are also the three industries posting the largest numerical declines for the first third of the year.

Information jobs have declined by 3,600, Financial Activities by 1,700, and Wholesale Trade jobs by 3,200.

Georgia Information Sector Employment

Georgia Financial Activities Sector Employment

Georgia Wholesale Trade Sector Employment

Preliminary data for May does not change the picture significantly. 

The Information sector added 100 jobs in May, Financial Activities added 900 jobs, and Wholesale Trade added 100 jobs. Despite preliminary indications of job increases, all three industries remain below their levels at the end of December when seasonal factors are excluded from the data.

Job Growth in Lower Paying Industries

In contrast, the Leisure and Hospitality industry has added the most jobs in the first four months, gaining 3,100 positions followed by Retail Trade with 2,500 net new jobs. 

The two industries are among those with the lowest average pay in the state. In 2018, Leisure and Hospitality jobs in Georgia averaged $20,602 while Retail Trade jobs averaged $31,093.

In May, Retail Trade added another 600 jobs, while the Leisure and Hospitality industry lost 300, according to preliminary data.

Georgia Retail Trade Employment

Georgia Leisure and Hospitality Employment

One bright spot is the growth in Education and Health Services in the state. For the first four months, the sector grew by 7,900 jobs with an additional 1,100 jobs added in May.

The Education and Health Care sector sits in the middle of the pay range by industry with salaries in the sector averaging $52,251, just below the state average of $53,543 for all nonfarm jobs.

Lower Pay Results In Lower Spending and Tax Revenues

Lower incomes results in lower consumption, which ultimately feeds back into lower government revenues through sales taxes.

If the state does not experience a rebound, not only in the number of jobs created but also in the salaries associated with the new jobs, then Georgia will have greater difficulties raising revenue in the future year.

Georgia’s unemployment rate remains low in December, but does it matter?

Georgia’s unemployment rate was essentially unchanged in December at 3.6 percent compared to a 3.5 percent rate in November after revisions and seasonal adjustment. Speaking statistically, the 0.1 percentage point change is within the error parameters, so there was no statistical movement in the rate between November and December.

Historically, economists in the United States put a great deal of emphasis on the unemployment rate, as they saw it as a meaningful measure of the overall strength of the economy. To simplify the idea, a low unemployment rate meant a high percentage of people were employed and therefore earning income that they could use to boost the overall economy through their purchases.

Alternatively, a high or rising unemployment rate meant that fewer people were earning income and so the outlook for the economy would dim with the idea that fewer people working would buy fewer goods and services. Since about 70 percent of the U.S. economy is driven by consumer purchases, this relationship seemed to make sense.

Problems with using the unemployment rate as a measure

Over time, though, the useful correlation between the unemployment rate and economic progess is showing a breakdown.

You need look no further than the estimated 800,000 Federal employees affected by the partial government shutdown to see the problem. Those employees who are furloughed are defined as unemployed, but nearly half of the workers are being treated as “excepted” employees, which means they are working and counted as employed but not receiving pay.

Working but unpaid employees is only part of the problem with reading too much into an unemployment number.

Overall, the number of people who are no longer in the workforce continues to grow even after the recession ended. Partially this is because of an aging population with more people of retirement age. Retirees living off their Social Security, pensions, and savings have income that does not vary with their employment status. As this group enlarges, the relationship between employment and income declines.

For the 10 years ending in December 2018, nonfarm employment in the U.S. has risen by 11.4 percent, while the number of people not in the labor force has grown by 19.4 percent.

For all of these reasons, the unemployment rate no longer offers the value that it carried in the past as a barometer of the overall economy.

Using wages and income as a better economic measure

Economists must become more focused on wages and income rather than employment to judge the future direction of the economy. After all, it is income that drives household consumption not merely having a job.

By that measure, Georgia’s workers have struggled to keep up with the national average. In 2008, the average wage in Georgia was $786 per week, 7 percent below the national average. After 10 years, a Georgia worker’s average weekly wage has risen to $979 per week, but had risen at a slower pace than the nation, resulting in the gap growing to nearly 8 percent.

Using information from DeptofNumbers.com, you can see that “the current median household income for Georgia is $56,183. Real median household income peaked in 2007 at $58,234 and is now $2,051 (3.52%) lower. From a post peak low of $50,253 in 2011, real median household income for Georgia has now grown by $5,930 (11.80%)."

Real Median Household Income: Georgia, National

Compare this graph to the one at the beginning of this article showing unemployment rates for Georgia, and you can see that the income data provides a more valid picture of the state’s current economy.

To truly judge a state’s economic progress, ignore its unemployment rate and focus on data that provides a better description of its economic progress.

Georgia’s largest counties post solid employment gains but wages continue to lag nation

Employment grew in 9 of Georgia’s 10 largest counties from June 2017 to June 2018, according to newly released information from the U.S. Bureau of Labor Statistics.

Statewide, Georgia added 87,732 jobs, an increase of nearly 2% compared to the nation’s growth of 1.5%. Combined, the 9 largest counties accounted for a net addition of 43,440 new jobs.  The state’s 9 largest counties accounted for almost half of the state’s new jobs with the other half coming from the state’s remaining 150 counties. (Georgia has a total of 159 counties, more than any state with the exception of Texas.)

While employment in the state outpaced the nation for the 12 months ending in June, average weekly wages continued lag the national average as the state adds more jobs but at lower wages.

As of the second quarter of 2018, the average weekly wage in Georgia was $979, 7% below the national average of $1,055. Over the past year, weekly wages in Georgia grew by 2.2% compared to national wage growth of 3.3%.

Employment Changes June 2017 to June 2018

Fulton County (part of the Atlanta, Georgia Metropolitan Statistical Area) recorded the largest numerical job increase (20,620), while Hall County (which constitutes the Gainesville, Georgia MSA) showed the largest percentage increase (2.6%) over the year.

Of the 10 largest counties in the state, only Bibb County (part of the Macon, Georgia MSA) reported stagnant employment. Two counties showed employment growth of less than 1% over the year with Clayton County (part of the Atlanta, Georgia MSA) growing by only 615 jobs, while employment in Richmond County (part of the Augusta, Georgia MSA) increased by only 551 jobs.

10-year Employment Changes

Over the past 10 years, employment growth in Georgia has outpaced the nation. From June 2008 to June 2018, Georgia added 382,194 new jobs, an increase of 9.4% compared to the national increase of 7.9%.

Job growth has been concentrated in 8 of the 10 largest counties, which accounted for an increase of 266,057 jobs over the decade, or more than two-thirds of the state’s total job growth. As of June 2018, those 8 counties accounted for 53% of total employment in the state, up from 51% in June 2008.

Employment increases in the 8 counties over the decade ranged from 17.9% for Fulton County to 1% for DeKalb County (part of the Atlanta, Georgia MSA).

Declines occurred in the middle Georgia counties of Bibb, which lost 2,994 jobs over the decade, as well as Muscogee (part of the Columbus, Georgia MSA), which suffered a net loss of 1,767 jobs.

Changes in Average Weekly Wage June 2017 to June 2018

Fulton County continued to report the highest average weekly wage among the state’s largest counties at $1,353 per week, an increase of 1.8% over the year. Clayton County showed the greatest percentage increase with average weekly wages rising by 5.5%.

Cobb County (part of the Atlanta, Georgia MSA) recorded the only average weekly wage decline over the 12 months, dropping an average of $3 to $1,067 per week.

10-year Wage Growth

Georgia wages, already below the national average in 2008, continued to grow slower than the nation over the past decade. From the second quarter of 2008 to the second quarter of 2018, average weekly wages in Georgia rose 24.6% compared to a national increase of 25.4%.

All 10 of the largest counties in the state showed wage increases over the decade with both Clayton and Hall counties showing percentage growth above the national average. Ten-year average wage growth in the counties ranged from 33.8% for Clayton County to 15.6% in Gwinnett County (part of the Atlanta, Georgia MSA).

As of the second quarter of 2018, Muscogee County recorded the lowest average weekly wage among the 10 largest counties in the state at $797, more than 18% below the state’s average and more than 24% below the national average.

Data in this report comes from the U.S. Bureau of Labor Statistics' Quarterly Census of Employment and Wages (QCEW) program. More information is available at https://www.bls.gov/cew/.