UNEMPLOYMENT RATE JUST THE TIP OF THE ICEBERG

Jun 3, 2014 by

Barnstable Patriot
Written By: David Augustinho
May 2014

It is one thing to quote the current unemployment rate for a given month, but there are a large number of underlying statistics that help round out our understanding of our labor force.

All of the statistics that I am using today are national data for the fourth quarter of calendar year 2013, with the exception of the most recent monthly unemployment rate for the nation and region, which I will get to in a minute.

In the U.S. in 2013 the unemployment rate continued to decline from the highs of the 2008-2009 great recession figures. In the fourth quarter of 2013 the unemployment rate was 7%. Currently the national unemployment rate is 6.3%, indicating that the national economy continues to improve.

The number of individuals employed in the country was 144.2 million, with approximately 10 million unemployed. 37% of the unemployed were classified as long-term unemployed, defined as 6 months or more out of work. Some 26%, or over 2.7 million people were out of work for at least a year. 1 in 8, or about 12% were out of work for two years!

The long-term unemployed are an especially vexing issue for workforce development practitioners. I think that part of the difficulty of finding work for these people is that many have been displaced from mid-level management type of positions and cannot find replacement jobs that match their skill and experience level. One indicator of this is that about two out of three workers who found employment in 2013 were hired into the service sector, which consists of generally lower wage occupations.

One indicator of general health in our economy is the participation rate of individuals eligible to be in the labor force (the labor force is calculated by adding the number of employed and the number of unemployed workers looking for a job). For the 4th quarter of 2013 the labor participation rate for all workers 16 years and older was 62.8%.

We can break down this data a bit finer and look at participation rates and unemployment for certain demographic groups.

One of the most revealing comparisons is by education levels. Let’s look at the participation rates and unemployment rates for individuals who did not complete high school, high school completers, individuals with some college up to an Associate’s Degree and individuals with Bachelor’s Degree.

For individuals without a high school diploma the participation rate is 44.2% and the unemployment rate is 10.4 %. High school graduates participate at a 58.2% rate and experience 7.2% unemployment. Those with some college have a 67.3% participation rate with a 6.3% unemployment rate, while college grade participate at a 75.2% rate and have only a 3.8% unemployment rate.

The above statistics are ample argument for why we call graduating from high school a million dollar decision. Not only is it easier to find and keep a job, workers who did not complete high school will not earn hourly rates equal to any of the other groups. And the good news is that all of these groups have a lower unemployment rate than in the previous year.

In calendar year 2013 about 900,000 jobs were filled. That number is down a small amount from the previous two years.

Workers holding more than one job equaled 6.9 million, about 4.8% of the workforce. Another 14.6 million workers were self-employed.

Older workers are participating at a higher rate than they have historically. 18.5% of workers 65 years old and up are participating in the labor force. Interestingly only 34% of the 16-19 year olds in the country are labor force participants.

Some of the reasons that our labor participation rates are lower than in the past are driven by the older demographics of the country. The significant number of baby boomers retiring certainly decreases the participation rates. More importantly, to me, is the fact that wages are not growing faster than inflation, which is really low. Weekly wages went up only 1% last year while inflation 1.5%. Low wages certainly provide a disincentive to individuals considering entering the labor force. You can see why many economists and workforce practitioners support raising the minimum wage.

So what is our local unemployment rate? For April Barnstable County had an unemployment rate of 6.7%, which is down a full percentage point from the same month last year, pretty good. The town of Barnstable had an unemployment rate of 5.6% in April, also a full percentage point lower than April of 3013, very good.

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