Friday, October 05, 2007

Jobs in August

The data on employment and unemployment for August were released earlier this week. The Post-Gazette reported that "the region added 3,900 jobs in August...the 19th consecutive month of gains," while the Tribune-Review reported that the region "lost 3,800 jobs in August, the second consecutive month of job losses."

Which is it? The Post-Gazette is reporting how August this year compares to August last year, whereas the Tribune-Review is reporting how August this year compares to July this year. Jobs decrease virtually every year between July and August. so the decrease this year is not a surprise. Indeed, the Tribune-Review noted that the job loss was typical for August.

Although it is true that for 19 months, there have been more jobs than in the same month the previous year, it is also true that the growth has been very small, and it's getting worse, not better. Comparing August 2006 to August 2007, jobs in the Pittsburgh Region grew by a mere 0.34%. That's only half of the growth rates we were experiencing last fall and earlier this year.

How is our economy doing compared to other regions? Our 0.34% job growth is only about 1/4 of the national growth rate, and it's the 4th worst job growth rate among the top 40 regions. Only Cincinnati, Cleveland, and Detroit have had slower job growth than the Pittsburgh Region over the past year. The Pittsburgh Region is also growing jobs more slowly than most other parts of Pennsylvania -- Allentown, Harrisburg, Lancaster, Philadelphia, Scranton, and York all created jobs at rates 3 to 6 times as high as Pittsburgh over the past year.

Moreover, this is the fourth straight month in which the Pittsburgh Region grew at less than 30% of the national growth rate. Last fall, and earlier this year, we were growing slightly better: 35-40% of the national growth rate.

What about the unemployment rate? The (non-seasonally adjusted) unemployment rate in August was 4.5%, compared to 4.9% in August of 2006. That's good news, right?

Actually, no. If you look at the unemployment statistics more carefully, you see that the unemployment rate didn't go down because more people got jobs. It went down because people dropped out of the labor force. There were 5,100 fewer people in the labor force in August 2007 than in August 2006, 4,600 fewer unemployed people, and 500 fewer employed people (the number of people employed is not the same as the number of jobs, which is why the number of people employed can decrease even though the number of jobs increases; for example, self-employed people are not counted in job totals).

So our unemployment rate is lower because unemployed people stopped looking for work (or left the region entirely), not because they found jobs.

Of greatest concern may be the fact that the labor force here has been shrinking not only over the past year, but for the past decade. In fact, there were fewer people in the labor force last month than there were in August 1997. The slow economy over the past few years has meant fewer job opportunities than in the past (we have 13,000 fewer jobs in the region today than we did in 2000), and that may well have led people to leave the region in search of jobs elsewhere.

The bottom line is that our economy is doing poorly, and consistently so, and we're likely losing talented workers as a result.


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