Monday, August 06, 2007

Jobs in June -- Good News, Bad News, or No News?

Last Tuesday, the state released the latest job figures and unemployment rates for June. An article in the Tribune-Review reported on this, with the headline "Jobs in Pittsburgh region hit highest mark in 5 years."

Good news, right? Well, unfortunately, no.

Neither the Trib article nor the state's press release bother to point out that the number of jobs in the Pittsburgh region (and in the nation) is always higher in June. Last year (in 2006), jobs in the Pittsburgh Region peaked in June at 1,152,200, and then there were fewer jobs in every month since, until this June (2007), when the job count reached 1,156,700. In 2005, jobs peaked in June at 1,147, 700, and then there were fewer jobs every month afterwards until June 2006. Ditto for 2004, 2003, 2002, and 2001. It's only been in years with strong overall job growth that the number of jobs later in the year exceeded the level in June, and the last time that happened here was in 2000.

So don't be at all surprised at the end of August when the state reports that the number of jobs dropped in July. It happens every year, and it will be a significant drop -- probably 15,000 or more. That won't really be bad news, just like the increase of 7,800 in June wasn't really good news. In fact, it's not really news at all, it's just the normal seasonality in the economy. You should never measure the strength of the local economy based on the month-to-month changes in the same year -- always ask what the change was from the same month in the prior year.

OK, so what was the change from the same month in the prior year??

The answer: Jobs in the Pittsburgh Region increased by 4,500 from June 2006 to June 2007, a mere 0.39% increase. That's the exact same small growth rate that occurred here between June 2005 and 2006, meaning that the local economy is not really improving. Almost all of the job growth in 2007 was in health care and social assistance (3,800 of the 4,500 total job growth)

By comparison, jobs in the U.S. as a whole grew by 1.5% between June 2006 and June 2007, nearly 4 times as fast as the job growth rate here. Although our small job growth rate was better than our neighbors in Ohio and Michigan (Cleveland and Detroit actually lost jobs compared to last year, and Cincinnati and Columbus only grew at half the rate we did), they're about the only regions that are doing worse than we are. For example, Charlotte grew at seven times the rate that we did (2.8%), Milwaukee and Minneapolis grew more than three times as fast as we did (1.3% and 1.5%, respectively), and Boston, Kansas City, and St. Louis all grew at more than double our pace (all at 1.1%). Morgantown, WV, right across our border to the south, created jobs at a pace ten times as fast as we did (4.7% growth in jobs between June 2006 and June 2007). In fact, the Morgantown region has created 2,700 jobs in the past year, more than half as many as the entire Pittsburgh region, despite being only 1/20th the size.

Although the headline in the Trib article was correct that there are more jobs here now than there have been for the past five years, there are still fewer jobs here today than there were in June 2002. Even more striking is the fact that six years ago, in June, 2001, there were 15,000 more jobs in the region than there are today.

The sad truth is that the job news for June was no news at all -- just the same weak economic performance we've been experiencing for the past several years.


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