Citizen Economists » labor force

Tale of two charts

Christopher Briem — Tue, 29 Jan 2013 19:15:39 +0000

With December data recently out. More and more workers in Pittsburgh, and another new all-time high in the size of the regional labor force. Bigger observation is that the rate of labor force growth here is not slowing down either. In fact, for December it was the largest year over year increase in the region’s labor force in over 15 years:

But the proportion that are are working in the mills is within an insignificant digit of its all-time low. Now down to 7.5% as of December.

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Apples and oranges and counting workers

Christopher Briem — Mon, 07 Jan 2013 13:15:59 +0000

OK… this is for labor force wonks only.

So if you read the official press release on the monthly dump of labor force statistics, a headline the state points out is that the count of total unemployed in the region dropped by 2,000 between October and November, and that was the largest monthly drop since May of 1999! A meme some of the media picked up on.
Well… sort of. If you look back in the news, there were plenty of months were unemployment drops of 2K or much more were reported. But that data has all been revised and virtually all larger month over month changes were dampened down (which begs a question, what would the 2K unemployment drop have been under the old data?) So it all depends how you look at it.

Some may recall that the state recently switched the method of seasonal adjustment for this data. I went into that in some detail earlier. Basically, the state stopped applying their own seasonal adjustment, and instead standardized on the US Bureau of Labor Statistics data. OK. No problem. They also did what is a good analytical thing and switched their historical data to reflect the new adjustment, even though it was different from what was reported at the time. OK as well. They did that ‘backcasting’ all the way back to January of 2000 which is what the BLS was providing.

Soo… is the current unemployment drop the biggest since 1999? Basically you have apples and oranges. The new seasonal adjustment clearly smooths out a lot of month over month variability than in the past. So ove the last decade there were plenty of months where unemployment dropped by 2,000 or more in the region. But with the seasonal adjustment they went away. No surprise that the last big jump was in data from the earlier decade, which reflects the older seasonal adjustment that allowed for bigger monthly jumps in the data. How different are the new vs. old seasonal adjustments? Just compare what the time series looks like before and after January 2000. Lot’s of variation just gone per this graphic of whatis nominally supposed to be consistent data looking backwards. Note the whole time series is for seasonally adjusted data. But there is no need for my highlighting to show where the seasonaly adjustment algorithms differ. Two pretty different realities.

And this is not a story of a decade ago vs. now. The data that was coming out earlier last year was really the older data. Lots of contemporeanous month by month analysis of that data over the decade would actually be very different if the data now being reported was used. Basically a lot of apparent ‘news’ at the time just got wiped away by the new data.

So the punchline? Know your data. Goes beyond repeating a number.

For some simpler punditry. Employment and Labor Force for Pittsburgh are again hitting new all-time highs in November. I will always argue to look at trends more than the monthly numbers for the reasons above and more. So it turns out this is the 7th straight month in a row the region has hit a new all-time labor force peak. I think we can begin to talk about it well beyond any monthly variation. Not that there has been a single mention of the factoid (all time peak labor force in Pittsburgh) by anyone. Odd.

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Help still wanted

Christopher Briem — Fri, 28 Dec 2012 16:55:17 +0000

Some may have read the article today in the PG on women in Pittsburgh’s labor force. It references a report we did some years ago on gender wage differences in the Pittsburgh region. Note the story today does not mention the third author Susan Hansen as well for the record. No matter how you parse it, I have been saying for some time (page 3 of this* for example) that the trend in female labor force participation is one of the keys to understanding economic transformation in Pittsburgh.

So how bad was it for women working in Pittsburgh in the past. Earlier in the week I quoted a sentence from a 1946 study that said Pittsburgh would…. “slowly decline unless new industries employing women and those engaged in the production of consumer goods are attracted to the area.”

Think about that date for a minute. 1946 was not a period when there was a lot of thought given to gender issues in the labor force. The women who had entered the workforce to fill crucial shortages during the war were being laid off en masse as men returned from service. Things must have been acutely different here for that thought to even come to mind. Labor force participation for women, particularly married women and even more so married women with children were all far below what was typical elsewhere in the nation and would remain so for decades to come.

But play forward several decades. So much that the media went to court to keep segregating job ads by gender long after most of the country has ceased the practice. In Pittsburgh Press Co. v. Pittsburgh Commission on Human Relations (1973), the U.S. Supreme Court upheld a local ordinance that prohibited publishing job advertisements that sorted positions into “Help Wanted: Male” and “Help Wanted: Female.” Think about it. 1973 is not the stone age, yet the Pittsburgh Press at the time was willing to spend money to appeal the ruling against them all the way to the supreme court to advertise some jobs for women and others for men. Only in the last couple of years would they even concede the minimal disclaimer I pasted in the image above…. and I will bet you that was only put into print on the advice of their attorneys.

Plenty of folks working today had entered the labor force by then. Was the training and education system here set up for women to compete with men? It was worse than that. It was well into the 20th century that a lot of large employers in the Pittsburgh region would not as policy employ married women with children.

* Note also the sentence of population trends for the region turning positive in 10-15 years. That was early in 2002, which means my forecasts were really from 2001. I think we may have hit that window pretty closely.

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more people……

Christopher Briem — Wed, 28 Nov 2012 18:45:29 +0000

Boring unemployment news today… or is it. Another jump in Pittsburgh’s labor force. See interactive graph for more. Pittsburgh MSA labor force +26K year over year through October. Works out to +2.1% or more than double US labor force growth (+1%) over the same period.

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Beyond the Burgh – Peak Pennsylvania Labor Force as well

Christopher Briem — Thu, 01 Nov 2012 19:00:25 +0000

I tend to forget the state stuff, but I should have noticed this. Pennsylvania hit a new all-time labor force peak with the September data that came out a couple weeks ago.

Link: Data and chart from BLS.

Specifically the PA labor force is showing over 6.5 million for the first time ever. Topping a peak of 6.482 million hit in November of 2008.

Must not mean anything since nobody notices such things. Yet this really matters in ways you may not realize. It turns out that a big chunk of the official budget projections calculated by the Commonwealth of Pennsylvania are crucally dependent on what is projected to happen with labor force participation rates (see last slide). Seriously.. it works out that lower LFP = bad for state revenue projections, higher LFP = higher revenue projections.

It’s funny anticipating how much angst there will be debating the state budget, but virtually no notice of the numbers that will actually shape that debate up front. The way it works in Pennsylvania is that it all starts with the revenue projections. One could argue that it ends there as well.

Which number do I use?

Christopher Briem — Fri, 05 Oct 2012 18:45:01 +0000

So here is a labor force story in the news today. Trib: Job search dropouts abound

The theme there? The labor force participation rate has been trending down. Ok. Hold that thought, but remember that the labor force participation rate is the labor force divided by the working age population variously defined.

Now what do we know the local labor force? Highest level ever. Yes, currently the size of the regional labor force is at or near its highest point in history. As in ever. All time. I tell people this and they just don’t believe me. Most likely because the news all reads the opposite. Of course it is mostly news reflecting national stats and not what is going on locally.

So what if the labor force participation rate is going down, but the size of Pittsburgh’s labor force is growing rather rapidly then what gives? One of two things kind of has to be true. One possibility is that thelocal labor force participation rate is shooting up; which makes that headline today the very opposite of what is the local story.

So I was going to end it there, but there is another story that gets to how we all overinterpret the monthly labor force data. So the local labor force data just came out the other day and the headline is Pittsburgh’s unemployment rate went up to 7.3%.

Or did it?

7.3% is the number in the press release put out for sure (saved here dated October 1st). Yet compare those numbers to the numbers just posted on the state’s interactive web site which were just updated as well. What I see (downloaded October 4) is this and it is not 7.3%.

In itself not a big deal really and I suspect some revision did not get into the right file. So I suspect one of the sources (press release or interactive data) will be updated to eliminate the discrepancy, but still it gets to the core point that the coverage of the monthly preliminary numbers is at least overwrought. In fact if you look at the JULY 2012 numbers in the states press release and compare it to the interactive data the region’s unemployment rate is different by 0.3%. That actually is kind of a big deal somehow. Remember there was a news cycle on the first numbers that came out and we pay little attention to any revisions.

So depending on which dataset you look at you can’t definitively say the latest numbers are the all time labor force high. The important thing is the trend and that is still pretty clear. Whatever is going on with the latest number the Pittsburgh region is at or bouncing around its all time labor force peak, a story completely overlooked locally. It is certainly a story different from the nation’s and deserves a lot more treatment than

It Takes One to Know One

Simon Grey — Tue, 18 Sep 2012 19:30:39 +0000

Some hack calls out FoxNews for lying about unemployment:

During a segment criticizing the Obama administration for its messaging on the economy, a Fox & Friends graphic claimed that the “real unemployment rate” had increased from 7.8% in 2009 to 14.7% now.

But in order to make the claim that unemployment had increased from 7.8% to 14.7% during Obama’s time in office, Fox had to conflate two different statistics and completely distort Obama’s jobs record.

The 7.8 percent figure is the official unemployment rate from January 2009. This statistic reports on people who are unemployed and actively looking for a job. But as of the latest report, the official unemployment rate is 8.1 percent (0.3 percent higher than it was in January 2009), not 14.7 percent.

The 14.7 percent figure is a completely different measurement of the unemployed, which in addition to those who are actively looking for work, also counts people who are unemployed and discouraged from looking for a new job, part-time workers who prefer full-time employment, and more. This alternative measure of unemployment, which conservatives often call the “real” unemployment rate, was 14.2 percent in January 2009 — 0.5 percentage points lower than it is today.

So, it sounds like unemployment hasn’t gotten that much worse during the course of Obama’s administration,* doesn’t it? Oh, wait…
* As if the president is primarily responsible for every last aspect of the economy anyway, but that’s a post for another day.

Labor Force Metrics 101

Christopher Briem — Wed, 29 Aug 2012 18:15:58 +0000

So the stats out today say the region’s unemployment rate is up 3/10ths of a percent. I wonder a bit. While all data out there has issues, I don’t like poking at methodology too much since it lends itself for folks coming to doubt the data. You just need to understand the strengths and weaknesses of virtually all data you look at other than maybe the spot temperature outside as reported. I guess we can trust that for the most part… or maybe not?

Still, I don’t quite believe it. There is an unspoken truth that what we know of the monthly metro-area unemployment rate is less than what you might infer given all the news coverage of that one factoid. There is no time for the full seminar one could have on the subject, but the labor force data you see monthy is from the Local Area Unemployment Statistics (LAUS) program.

Read just one snippet from the LAUS methodology. Skip down to the section subtitled “Estimates for substate labor market areas” and skip the first paragraph which wil not apply to us. The whole think will explain certain issues, but in particular read this paragraph on counting the number of folks unemployed:

The second category, “new entrants and reentrants into the labor force,” cannot be estimated directly from UI statistics, because unemployment for these persons is not immediately preceded by the period of employment required to receive UI benefits. In addition, there is no uniform source of new entrants and reentrants data for States available at the LMA level; the only existing source available is from the CPS at the State level. Separate estimates for new entrants and for reentrants are derived from econometric models based on current and historical state entrants data from the CPS. These model estimates are then allocated to all Labor Market Areas (LMAs) based on the age population distribution of each LMA. For new entrants, the area’s proportion of 16-19 years population group to the State total of 16-19 years old population is used, and for reentrants, the handbook area’s proportion of 20 years and older population to the State total of 20 years and older population is used (emphasis added)

.
That paragraph and a few earlier parts get into this big issue that what is going on in the metro area is pretty much presumed to be the same as is happening across the entire state. It is never true, especially for Pennsylvania. It is not a flaw, you do what you have to do given the limited data, but at times like this it is important to understand the methodology.

(and mostly for frequent commenter BrianTH here) This also is why the reported labor force data for the City of Pittsburgh proper is worth taking with a grain of salt. The methodology for reporting municipal area labor force data is in the following section of the methodology. If the metro area data has issues, those extrapolations (warranted or not) become ever more acute in the small areas with labor force data being reported on. I mean, the state actually reports a change in unemployment rate each month for Ross Township. Rest assured neither they nor any of us have any meaningful idea what happened in Ross Township last month, up or down to any precision worth reporting on.

Where would there be uncertainty in the unemployment rate? Most folks believe the unemployment rate is counted by just adding up folks getting $$ benefits from the state and dividing. Not true. All the folks looking for work are counted as unemployed including those who either ran out of benefits or lets say you don’t qualify for benefits at all because you are just entering, or reentering the labor force. We can count the folks getting benefits, but the number on others being counted as unemployed have to come from other data sources which if you read the methodology you will see are often extrapolated from state patterns. Actual benefits-receiving unemployed are well less than half the total ‘unemployed’ in Pennsylvania, so it really matters how you add count them all. If you really dig into it, go look up the new (initial) unemployment claims in Pennsylvania for the week ended July 28. I see a number that is the lowest it has been in just about 4 years. Yet the state’s unemployment rate is moving up at a decent clip.

So what does that all mean? Probably the harder number of what is happening in the metro area economy each month is the non-farms jobs number coming from the Current Employer Survey (CES) which has no major extrapolation problem. Sample error in that, but not such a big assumption that what is happening locally mirros the state. What does the CES say these days? Pretty much we are pushing to new employment highs here.

Still.. what is odd in the data just out is what it says about the region’s labor force. If the labor force really went up by 7,700 over the month then we are well into record territory for the size of the region’s labor force. It is really odd when you consider most would say it is one of those quasi rules that labor force participation should go down if the unemployment rate is shooting up… yet the opposite would nominally appear to be the case in Pittsburgh. Of course it is not the case. I will repeat that labor force participation rates move much more glacially than most assume when trying to explain these monthly shifts in the numbers..

To put a point on the labor force story (or lack of story as it were) take a look at the updated graph of where we are going…

Curious trend there over last couple of years for the region… a trend which is even more surprising when you consider it is not really supported by any trend in local demographics. I went into the longer parse on that last month when we reached a new all-time labor force peak for the region.

So if you read any of that above. My personal take is one of two things is happening.. or one of two things almost have to be happening. Either the non-benefits receiving unemployed count is being overestimated for the region because it is an extrapolation from state data, which would make the unemployment rate look higher than it really is… or…. there really is a sizable flow of new workers moving into the region. Each would make the headline today a bit different. If I am wrong and the common wisdom is right that the whole answer here is that the labor force participation rate just in Pittsburgh is shooting up?? Then that is a big story unto itself since someone would have to explain why Pittsburgh of all places is going against national trends, but also against the pattern almost always true that the unemployment rate and the labor force participation are negatively correlated.

and when I say that more people are moving here, I of course mean in terms of net migration. So it could be that fewer are leaving. That may be the nexus of all of this. Since we are such a prodigious producer of college graduates, and given the semi-anemic state of the economy in a lot of regions folks.. the trends may all be reflecting a larger number of recent grads unable to find work elsewhere and are remaining in place here. That would all be quite consistent with this recent surge in the region’s unemployment rate coming right as the school year ended. If true then Border Guard Bob was successful in the end. Of course he had to tank the national economy to make it happen. Who knew he went to work for AIG after he was fired here?

Trouble in Paradise

Christopher Briem — Wed, 22 Aug 2012 15:00:42 +0000

Speaking of data produced in Harrisburg, last week was the monthly dump of labor force data for the state. All bad, right? Let’s go beyond the headline and look at national data to do some simple benchmarking to see how Pennsylvania did compared to other states. I’ll only pose one question with this which is: other than recent history, how far would you have to go back for Pennsylvania to come out near the top in this metric? I don’t actually know the answer to that btw… and am too lazy to figure it out right now.

But lets take out the District of Columbia out just for argument’s sake. In this state data the District of Columbia means the district itself. So not even the metro region there on the other side of the Appalachians, but just the city proper of roughly 618K people. Looking just at states the same data looks like this:

Note things not faring well in Hawaii. Still you think someone in the greater public infosphere might take note that it is Pennsylvania with the fastest growing labor force in the nation. Maybe too much cognitive dissonance in that to report on it. If I could do that thing Mr. Spock did with his eyebrow…….

Daily Ranking – Prime Workforce Growth

Christopher Briem — Thu, 28 Jun 2012 18:30:38 +0000

So it really has been more than just decades since we would have even been considered for a ranking in something like this. Count in score at least. Area Development magazine (always a link there on the right btw) has us ranked near the top for Prime Workforce Growth. Seriously, I am not making it up.

Why you may ask. You may read the news today of the latest labor force news for the region and conclude the situation is quite dour. Yet it is now 66 months that the local unemployment rate has been below the nation’s, 68 months since Pittsburgh’s unemployment rate was actually above the nation’s.

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