You Can’t Separate Labor Force Participation From The Unemployment Rate - Granite Grok

You Can’t Separate Labor Force Participation From The Unemployment Rate

Unemployment

America’s national unemployment rate is 5.1 percent. The country added 173,000 jobs in August. The press is trumpeting our economic success. Happy days are here again, or are they?

A record 94,031,000 people have left the US work force. But 5.1 percent unemployment, you croon. Sure, it sounds great if you have a job or if your job is to croon about low unemployment, but to 94 million Americans that number is a lie.

The work force or labor participation rate and the unemployment rate are intimately connected and the former is far more telling than the latter. We see this in the unemployment numbers in New Hampshire from July of 2014 to July of 2015.

July 2015 July 2014 Change
New Hampshire
Labor Force 758,980 753,770 5,210
Employment 731,800 722,610 9,190
Unemployment 27,180 31,160 (3,980)
Rate 3.6% 4.1% -0.5%

 

These are solid numbers.

Statewide the workforce grew by 5,210 people and over 9,000 folks found jobs in the Granite State over the past year. The total number of unemployed persons decreased by almost 4000. The unemployment rate dropped by one-half of one percent. There is nothing misleading about these economic gains. So why show you this? Contrast.

New Hampshire also breaks down its employment data by county.

Belknap County saw an identical year over year unemployment rate decline of 0.5% for the same period.

Belknap County  July 2015  July 2014  Change
Labor Force 34,070 34,180 (110)
Employment 33,000 32,940 60
Unemployment 1,070 1,240 (170)
Rate 3.1% 3.6% -0.5%

 

What’s different?

A total of 110 people left the labor force. Yes, unemployment decreased by 170 but only 60 of those persons found work. Sixty-five percent of the reported 0.5 percent improvement had nothing to do with unemployed persons finding work and collecting a paycheck

Sullivan County, New Hampshire adds further perspective.

Sullivan County  July 2015  July 2014  Change
Labor Force 24,420 24,560 (140)
Employment 23,670 23,730 (60)
Unemployment 750 830 (80)
Rate 3.1% 3.4% -0.3%

 

The reported employment rate shows improvement in Sullivan County, but there were fewer jobs. The decrease in the number of unemployed and the improvement in the unemployment percentage are both directly attributable to the decline in the labor force.

The most telling example of the economic disparity between the unemployment rate and work force participation comes to us from Coos County. Between July 2014 and July 2015, the New Hampshire Department of labor reports a decrease in the unemployment rate from 5.4 percent in July of 2014 to 4.2 percent in July of 2015. The 1.2 point reported improvement is the single largest decrease by county in the entire state in this time period. By all accounts it should be heralded as the economic driver of the state.

So why aren’t we celebrating? Take a look for yourself.

Coos County  July 2015  July 2014  Change
Labor Force 15,640 16,000 (360)
Employment 14,980 15,140 (160)
Unemployment 660 860 (200)
Rate 4.2% 5.4% 1.2%

 

The raw unemployment numbers declined by 200, but there are 160 fewer people collecting paychecks and 360 people left the labor force. The entire “improvement” is a result of job loss and people who gave up looking for a job in Coos County.

The New Hampshire County math works the same way when commas and zeros create bigger numbers. The US Department of Labor says we added 173,000 jobs in the US in August, but in the same month 261,000 people gave up looking for work. They gave up and left the labor force. That is why no one is celebrating in Coos County, New Hampshire and in plenty of other counties across the nation.

Data courtesy of the NH Department of Labor.

Originally posted at Wachdog.org. <– Please follow the link and Like! the article. Thanks for your  support!

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