Friday, June 22, 2012

Toledo should be cautious about May's unemployment rate

As an elected official, employment numbers were very important to me. Now that I'm out of office, they still are.

But it isn't the publicized UNemployment rate I pay attention to.

We get a better - and more accurate - picture of what is going on when we look at the employment rate and the number of people actually in the workforce.

Today's paper has an article about city revenues (more about that in a separate post) which mentions unemployment rates dropping:

Unemployment in Toledo was 8.5 percent in May, down from 10.2 percent in May, 2011.

"People are going back to work," finance committee chairman George Sarantou said.

"Not as fast as we would like but … clearly the unemployment numbers are dropping."

And yes, it is true that the unemployment rate has dropped from 10.2% in May 2011 to 8.5% this May.

But the employment numbers have barely changed!

According to Ohio's Labor Market Information web page, the number of people employed in the City of Toledo in May 2011 was 119,300. The number of people employed this May is 119,600. We have 300 more people at work this May than we did last May.

That does not equate to a near 2-point change in unemployment.

The key is the total number of people in the workforce.

There were 132,800 people in the civilian workforce in May 2011.
There are 130,600 people in the civilian workforce in May 2012.

Now, either we lost 2,200 people from our workforce or from the city itself. While I don't discount the fact that people are leaving Toledo, the more likely explanation is that the majority of those people are still here, still without a job, but just not being counted anymore.

For the sake of argument, let's add them back into the mix. If we include them in the labor force, our unemployment rate jumps to 9.9%. Still better than the 10.5% of last May, but nothing to tout.

Politicians can pat themselves on the back, give credit to others (presidents and/or governors) and use this as an indication of an improving economy.

But it's not an accurate picture - and decisions based upon the false idea that it is an accurate picture will prove very costly.

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