So you might think things are trending down for the regional economy if you take any of the stories on the unemployment rate ticking up (PG, Trib, PBT). True the unemployment rate ticked up a huge bit, 0.4 % points, between July and August. A big jump for sure, but not all unemployment rate increases are the same. So you really won’t catch this is you read the news, but consider at least two things on the state of the region’s labor market.
With data for August it has now been officially 59 months since the unemployment rate for the nation was lower than that for the Pittsburgh MSA. We know the national unemployment rate for September is stable. It is an awfully safe bet that there has not been enough convergence of the two time series to push the national unemployment rate below the regions. If true then September 2011 will mark 60 months, or 5 complete years since the local unemployment rate has been complete years since the local unemployment rate has been above the nations. You will not find any other comparable period of time that has ever been true in the past.
The bigger news story is something else. The Trib almost gets there and kind of mentions the fact that the labor force is indeed trending up. They say the August numbers just out are the largest labor force numbers for the region since December 2008. There is this thing called seasonal hiring that often kicks in for December which obscures the point a bit. To skip the seasonality, here are the August labor force totals for the Pittsburgh MSA (current 7 county definition) going back to the late 1970’s.
So yes, the labor force count for August is exactly tied with August 2008 for the largest labor force total for an August in the region’s history. History. All time. Ever. During a time when the national news is all about the lingering impacts on the labor market of the recession now ended, long term unemployment and declining labor force participation as folks become discouraged just about everywhere.
When you consider the obvious fact that there is a recession some other things are worth thinking about. Recessions have a general impact of lowering labor force participation. No reason to think that isnt happening here as well. Relative strength or not, the absolute unemployment rate is higher than normal, and the long term unemployed are likely dropping out of the labor force as they are elsewhere. We also know school enrollments in the region are up. Students tend not to be in the labor force as much as others, so that tends to push down labor force participation a bit.
So high labor force coupled with lower labor force participation equals something completely unmentioned in any of the news coverage as best I can tell. The number of people jumping in and out of the labor force is not anywhere near as variable as you might think reading the generic explanations of how the labor force data changes month after month. That exists of course, but long term there is this much bigger factor across the nation called migration that really changes the size of regional labor forces. At some point in the 1980’s the unemployment rate was exactly the same as it is here today. Does it mean the economic conditions back then have anything in comparison with today’s? In the 1980’s the metrics of unemployment would have been far far worse than they were for the entire decade if so many unemployed workers did not leave the region. Today, is the regional unemployment rate trending up because of deteriorating economic conditions? Or is it because we are pulling folks into the region by the relatively stronger economy compared to a lot of other places?