7 Years after the Great Recession, Georgia is regaining its employment levels

New data from the U.S. Bureau of Labor Statistics shows that after seven years, Georgia workforce has climbed out of the recession but still has a long way to go to regain its pre-recession levels.

BLS is reporting that Georgia’s employment-population ratio for 2016 was 59.0% as compared to the nation’s ratio of 59.7%. This is the best report for the state since 2009.

Prior to the last recession, Georgia routinely exceeded the employment-population ratio of the nation, but this all ended in 2009 when the state’s ratio fell to 59.1%.

It has taken Georgia from 2009 to 2016 to regain that level of employment.

Chart 1. Employment-Population Ratio, U.S. and Georgia, 

Annual Average 2000-2016

BLS defines the employment-population ratio simply as “the proportion of the civilian noninstitutional population aged 16 years and over that is employed.” It is widely regarded as the best gauge of workforce employment.

In 2016, Nebraska posted the highest ratio at 69.2%, while West Virginia saw the lowest ratio among states at 50.0%.

For Georgia, the increase from 2015 to 2016 was a statistically significant gain of 1.1 percentage points.

The gain represents an increase of 112,000 in the state’s population, with 154,000 more people employed and 21,000 fewer people listed as officially unemployed.

Georgia’s best year was in 2000 when the ratio stood at 66.8%.

Average State Unemployment Rate Declines

At 5.4%, Georgia’s average unemployment rate remains above the U.S. average of 4.9%. This was still an improvement from 2015’s numbers when the state posted an average rate of 6.0%.

In 2016, New Mexico recorded the highest average unemployment rate at 6.7%, while Hawaii had the lowest average rate at 3.0%.

Private Sector Wages Show Growth

As employment recovers, wages in Georgia are recovering also.

In December 2016, the average nonagricultural wage in the private sector in Georgia stood at $24.72 per hour, an increase of $3.35 over the same time period in 2009.

Wage growth in the state has equaled the pace set nationally. In December 2016, the national private sector average wage stood at $25.89 per hour.

Even accounting for inflation, since December 2009, average hourly wages in Georgia have risen by 15.7% while consumer prices have increased an average of 11.8%.

Georgia’s modest job growth places it 7th among states in September

Georgia continued its modest employment growth in September adding 9,100 new jobs over the month. The state’s unemployment rate stood at 5.8 percent compared to 6.9 percent, although this drop was partially due to the number of people dropping out of the labor force.

For the 12 months ending in September, the state has grown by 84,200 nonfarm jobs, an increase of 2 percent, the same percentage increase as for the nation. This placed the state seventh in the number of net new jobs over the year trailing behind California, Florida, Texas, New York, North Carolina, and Washington.

Georgia’s slowing job growth can be seen by comparing its most recent three-month average to the same period in 2014. Over the past three months, the state has produce an average of 7,300 jobs each month compared to 12,400 jobs the state was producing for the same time period last year.

One surprise this month was that August’s low initial job growth number (+2,200) was left unchanged in the monthly revisions.

Industries

September saw some severe changes in the fortunes of several industries both up and down. For example, manufacturing, which has been a slow growing segment, added 2,100 jobs over the month. Other industries that saw a sizeable pick-up in employment included government (+5,200) and education and health services (+3,200).

Professional and business services, which has been the state’s traditional growth engine slowed markedly in September, losing 3,400 jobs, while retail dropped another 1,900 employees.

Much of this may be attributed to seasonal adjustment factors that may play out over the next few months, making the three-month averages a better gauge of economic activity.

Still it remains a concern that professional and business services that has been such a mainstay of the state and the Atlanta area’s economy are showing such slow growth. For the three months ending in September, business and professional services have added an average of 300 jobs each month compared to the 3,600 job average the industry was posting at this same time in 2014.

Similarly, leisure and hospitality establishments are adding jobs at a rate of 700 per month compared to 1,800 per month for the same three months in 2014.

Education and health services hiring has also slowed with the industry adding an average of 800 jobs in each of the past three months compared to 1,700 jobs per month from July through September 2014.

Georgia 3-month average change in jobs for selected industries, July – September 2015, in thousands

Industry	Average monthly change in jobs  July – September 2014	Average monthly change in jobs  July – September 2015
All nonfarm industries	12.4	7.3
Retail	0.9	-0.5
Information	-0.4	0.3
Professional and business services	3.6	0.3
Education and health services	1.7	0.8
Leisure and hospitality	1.8	0.7
Government	0.9	4.0

Unemployment

 Georgia’s over-the-year decline in unemployment rate from 6.9 percent to 5.8 percent reflects a drop in both the number of unemployed (-55,663) as well as a pick-up in the number of people indicating employment (+44,128). The difference is attributable to the 11,535 people who have dropped out of the labor force.

This decline in labor force flies in the face of the general impression that the state’s population continues to grow, which should be resulting in a growing labor force rather than declining. No good explanation has been provided yet on why the state’s labor force continues to decline. 

Lower unemployment rate hides slowdown in Atlanta job market

Georgia's 5.9% unemployment rate hides the slowdown in the Atlanta area, which saw only 600 new jobs in August. 

Labor force continues to decline

Georgia reported a 5.9% unemployment rate for August, higher than the nation’s average of 5.1%, but still below its rate of 7.1% recorded in August 2014.

The headline rate disguises the slowdown in Georgia’s economy, and specifically in the Atlanta area.

The lower unemployment rate is due to people not participating in the current labor force. Since last August, Georgia has lost 6,137 people from its labor force, while the U.S. has added over 1 million.

Other economic indicators tend to show that the state is gaining population and workers, not losing them, so it is logical to assume that the true number of people who could be included in the labor force is growing at least at the same rate as the nation if not faster.

If the state’s labor force was growing at the same rate as the nation, August’s unemployment rate for Georgia would be at 6.5%.

This rate is more consistent with the evidence showing in the nonfarm jobs report also issued this week by the Bureau of Labor Statistics.

Nonfarm Employment grows modestly

Georgia recorded a modest 2,200 increase in August and reported 83,200 jobs over the year. The numbers translate into a 2.0% annual increase, slightly below the nation’s 2.1% job creation rate.

Over the past three months, Georgia has averaged 8,600 new jobs each month. As a comparison, the state recorded an average of 39,200 jobs for the comparable period in 2014.

The slowing rate caused Georgia to drop again in the state rankings of job creators. In June, the state was 6th best in the nation, in July it dropped to 8th place, and in August it now stands at 9th position.

In August, states adding more jobs than Georgia over the 12 months included (in order of number of jobs added): California, Florida, Texas, New York, North Carolina, Washington, Michigan, and Massachusetts.

Slowdown in Atlanta MSA offset by higher growth in rest of State

The slower growth rate for the state is directly attributable to the lower rate of job growth in the Atlanta area in August.

Last month, the Atlanta metro area added only 600 of the 2,200 new jobs recorded statewide. This is a remarkable turn for the Atlanta area, which had been the main driver of job growth over most of the previous 11 months.

For the three months ending in August, the Atlanta area lost 2,100 jobs compared to a loss of only 700 jobs for the same period in 2014.

Over the past 12 months, the Atlanta metro area has accounted for 69,800 of the 83,200 new jobs created in Georgia, or almost 84% of the state’s new jobs for an area that is home to almost 61% of the state’s employment.

In the Atlanta area, the noticeable slowdown in August was in the sector that is seen as Atlanta’s growth engine – Professional and Business Services. This sector includes engineering, accounting, and consulting firms; but it also includes employment agencies (temporary and permanent employment), which also showed slowing in August.

It is possible this is a one-month aberration due to a statistical or survey anomaly, but it will be worth watching over the next two months to see if the slowdown continues or will be wiped away by revisions in the data.

Georgia unemployment rate drops, job growth is modest in August

Georgia added 2,200 jobs in August, while the state’s unemployment rate dropped to 5.9%.

“This is the first time Georgia’s unemployment rate has dropped below six percent since May 2008,” said State Labor Commissioner Mark Butler. “The rate declined as our employers laid off the fewest workers for any month in more than 15 years and continued to create jobs.”

In a YouTube video, Commissioner Butler alluded to the fact that the decline in the rate was due to people dropping out of the labor force rather than people finding jobs. Layoffs decline while a slowdown continues in the number of new jobs being created by companies and government.

Nonfarm employment rose by 2,200 in August, a modest gain compared to the increase of 14,300 jobs in August 2014.

There was good news in the revision of the preliminary count of jobs in July. The July jobs number was revised upward from the preliminary 4,600 jobs to a revised count of 10,500 jobs.

Over the year, the state has added 83,200 jobs, its slowest 12-month increase since 2013.

In 2014, the state was growing faster than the nation, but that has now changed. Georgia’s job growth at 2.0% is slower than the national rate of 2.1% despite recent drops in the price of gasoline, which is putting more money into the pocket of consumers and Georgia businesses, such as Delta Air Lines and UPS.

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.

U.S. job creation catches up with Georgia in July

12-month job growth falls below 100,000 for first time in 17 months

Georgia saw the creation of 6,400 net new jobs in July 2015, according to preliminary seasonally adjusted data released today by the Georgia Department of Labor.

The new information also included a revision that wiped out all the jobs reported in the prior month. 

In June, the labor department announced that 2,300 jobs were added. With the revision, it is now reporting that the state actually lost 4,100 jobs in June.

Among industries in the state in July, retailing (+2,800), professional and business services (+3,100), and local government (+4,300) were significant contributors to the state’s job growth.

Losses occurred mainly in private educational services (-2,100) and state government (-2,400).

Annual job creation slows

For the 12 months ending in July, the state saw 89,400 jobs created, an increase of 2.1 %.

As a result of slower employment growth, 12-month job growth fell below 100,000 for the first time in 17 months. July marked the first time since the beginning of 2013 that state job growth did not exceed the national average.

In some states, like North Dakota, their jobs slowdown can be partially attributed to falling oil prices that have resulted in layoffs in oil and gas production. Since Georgia has little oil and gas, its employment is unaffected by reductions in oil and gas production, and the state’s economy should be benefiting from lower energy costs. Instead, it is recording a marked slowdown.

Metro Areas are key

The Atlanta metro area created 13,200 jobs in July, and the Savannah area saw another 2,000 jobs added. Other metro areas with positive job growth included Albany (+400), Athens (+100), Brunswick (+100), Columbus (+600), Dalton (+200), and Rome (+100).

Metro areas reporting seasonally adjusted declines in July included Augusta (-500), Gainesville (-1,000), Hinesville (-300), Macon (-1,000), and Valdosta (-700).

While the Atlanta metro area is home to approximately 61 % of jobs in Georgia, it has been responsible for almost 85 % of the state’s job growth over the past 12 months.

Unemployment rate

The state’s unemployment rate stood at 6.0 % in July compared to 7.3 % in July 2014 as the state’s labor force continues to shrink.

While many see a lower unemployment rate as a positive sign for the economy, when drops occur due to people leaving the labor market, it can be a negative indicator.