Wednesday, May 21, 2014

Lucas County sees lower unemployment rate, but what's the rest of the story?

The headlines read:

"Lucas County unemployment rate dropping"

"April’s jobless rates at lowest in over 10 years"

Yes, the unemployment rate in the county dropped to 5.7 percent, but that's not the lowest it's been and the drop really isn't due to people finding jobs.

The county is facing the same issue as the state, as I wrote at Ohio Watchdog. The statistic is easily manipulated by changing the number in the workforce.

As a commissioner, I rarely looked at the unemployment rate. Instead, I tracked employment - the number of people actually working - as I thought it a much better gauge of the health of the economy.

The last time Lucas County saw an unemployment rate this low was October 2006 when the rate was 5.4 percent. It was 5.6 percent in September and November that year.

But here's the catch: the number of people employed in October 2006 was 214,400.

The number of people with jobs in April 2014 was 192,400 - 22,000 less!

The loss of people in the workforce is even greater. In October 2006, there were 226,700 people counted. But in April 2014, there were only 204,100. That's a difference of 22,600.

To put that in perspective, that's more people than live in the cities of Maumee (pop. 14,129) or Oregon (pop. 20,291) or Sylvania (pop. 18,892).

So even though the unemployment is down, it's not because there are more people employed - it's because we have 22,600 who aren't being counted in the workforce. And the number of people with jobs is actually less.

Here's a chart showing the declining workforce and the historical employment numbers from January 2006 to April 2014:

As you can see, the number of people in the workforce has steadily declined, even as the number of employed fluctuates up and down, though still not reaching pre-recession numbers.

Certainly, loss of population, retiring baby boomers and others who are no longer counted in the workforce contribute to the declining numbers - but they cannot account for all of the drop. At least some of the loss of workforce is due to individuals who are no longer seeking work because they don't believe there are any opportunities for them.

The key is to understand how much of the loss of workforce is due to what factor.

So rather than celebrate or tout the declining unemployment rate, elected officials, policy makers and citizens should insist on good analysis to find out why the number of employed people has not returned to historic levels. This is a critical factor as the cities make long-term decisions about taxation and services.

1 comment:

Mike Shields said...

Good analysis. The half dozen or so strip shops near my workplace are averaging 33% vacancy. Two business that recently closed had both been around for over 30 years. Sure the economy is improving.

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