Allegheny County’s household employment lagging

Summary: As 2020 began, Allegheny County Executive Rich Fitzgerald touted the economic performance of the county since 2000.  As noted in late 2019, an Institute Policy Brief (Vol. 19, No. 44) reported that the seven-county Pittsburgh Metropolitan Statistical Area’s employment growth has fared quite poorly recently compared to similar-sized metros. Allegheny County makes up about half the population of the seven-county region.

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The Policy Brief findings were based on surveys of employer payrolls. These surveys cover only metro areas and do not report data by county. However, U.S. Bureau of Labor Statistics does collect household employment and labor force data at the county level through phone surveys.   

In the earlier Brief, the Pittsburgh metro area was compared with the Charlotte, Cincinnati, Cleveland, Indianapolis and San Antonio metro areas. This Brief looks at household employment data for the counties that host the cities for which the metro areas are named. They are Mecklenburg, N.C. (Charlotte), Hamilton and Cuyahoga, Ohio (Cincinnati and Cleveland), Marion, Ind. (Indianapolis) and Bexar, Texas (San Antonio).  Additionally, this study will include the performance of the nation and state. 

Household employment for Allegheny County in 2000 stood at 612,461 people (all figures are the 12-month average for the year cited).  In 2019 employment had increased to 625,287—a rise of 2.1 percent. In the sample of counties, it ranks as fourth best ahead of Cuyahoga (-11.4 percent) and Hamilton (-1.4 percent), but well behind Mecklenburg (57.5 percent), Bexar (45.7 percent) and Marion (7.8 percent).  Nationally household employment rose 15 percent and Pennsylvania’s count moved up 6.5 percent. 

The first decade of the new millennium ended just as the deep recession was drawing to a close with four counties having lower household employment in 2010 than 10 years earlier (Allegheny, Cuyahoga, Hamilton and Marion).  Pennsylvania also saw a drop while nationally household employment posted a very small 1.6 percent gain.  Meanwhile, Mecklenburg and Bexar (16.4 and 18.4 percent, respectively) recorded solid growth. 

With a rebound from recession levels and ongoing strong gains in recent years, the national household employment count climbed 13.2 percent between 2010 and 2019 while Pennsylvania posted a 6.5 percent rise. Unfortunately, Allegheny County, at 6.4 percent, trailed well behind the national gain and managed to surpass only Cuyahoga’s 1.8 percent. Allegheny’s growth fell far behind Mecklenburg (35.3 percent), Bexar (23 percent), and Marion (17.7 percent). Hamilton County, at 8.9 percent growth, was marginally better than Allegheny County’s gain. 

Another measure of the economic vitality of an area is labor force growth. The labor force consists of those who are employed and those who are actively seeking employment.  It does not count members of the population under age 16, retired or in an institution such as a school or hospital. 

From 2000-19, labor force in Allegheny County ticked up from 638,137 to 650,557 or barely 2 percent.  Over the same period the national labor force rose 14.7 percent, while the commonwealth rose by 6.5 percent.  Among the counties reviewed, Mecklenburg County’s labor force jumped by 58.9 percent followed by Bexar County at 44.3 percent and Marion County at 8.4 percent.  Both Ohio counties, Hamilton and Cuyahoga, had losses of 1.5 and 10 percent, respectively. 

While better than two Ohio counties, Allegheny County’s very slow 19-year labor force gain does not signal strong economic vitality in comparison to the nation and many counties across the country.  

As mentioned above, labor force is dependent upon the population at large—generally speaking, a growing population allows for a growing labor force.  While the next decennial Census will be taken in 2020, recent county population comparisons can be made using annual population estimates, with the 2018 estimate being the most recently available from the U.S. Census Bureau.

In the 2000 Census Allegheny County’s population was recorded as 1,281,666. By 2010 the count had fallen by 4.6 percent to 1,223,348.  The losses slowed to just 0.4 percent between 2010 and the 2018 population estimate of 1,218,452.  Over the time frame 2000 to 2018, Allegheny County’s population fell by 4.9 percent. 

By contrast, Pennsylvania’s population count over the two decades increased by 4.3 percent.  The bulk of that increase happened in the first decade (3.4 percent) before cooling off to less than one percent between 2010 and 2018. 

From 2000 to 2018, Mecklenburg led the six-county sample with a jump of 57.3 percent to the population (695,454 to 1.1 million) and will likely surpass Allegheny County in the next Census count.  Bexar County’s population climbed 42.3 percent to 1.99 million people, up from 1.4 million in 2000.  Marion County grew 11 percent over the period. However, Hamilton County and Cuyahoga County each saw population losses. Hamilton’s drop of 3.4 percent was smaller than Allegheny County’s.  But Cuyahoga was very hard hit with a population loss of 10.8 percent. 

In short, Allegheny County’s economic performance, as measured by household employment and labor force gains in comparison with the nation and state and several counties, has not fared well over the last two decades.  Of course, part of that story is tied with the loss of population.  But it all comes down to the availability of jobs and the business climate.  Job availability draws people to a county and boosts labor force and employment levels.

As many earlier Policy Briefs have noted, the business climate in Allegheny County has been less than ideal for job growth.  It is not free market-oriented or business friendly. A large part of that is the stifling regulatory climate coming not only from the state level but also from the county’s core, the City of Pittsburgh.   

It also has a lot to do with burdensome taxes, such as the additional one percent Regional Asset District sales tax, the drink and rental car tax and the very high level of school real estate taxes within the county.  Until the county reverses course and becomes more welcoming to businesses—without using public subsidies to draw them here—the slow growth that characterized the first two decades of this millennium will continue.

Population losses being felt in labor market

Summary: A recent Policy Brief (Vol. 19, No. 18) analyzed the long-running population decline in the Pittsburgh Metropolitan Statistical Area (MSA) and the challenges the economy faces as a result.  Obviously, population changes affect the area’s labor market, specifically the labor force available for employers.  This Brief looks at the area’s labor force and how it has changed over the past decade.

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The Pittsburgh MSA consists of the seven counties of Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland.  In the previous Brief, we noted that in 2010 the Census Bureau placed the Pittsburgh MSA’s population at 2,356,285.  Based on the most recent estimate from July 2018 the area’s population had fallen by 31,542 to 2,324,743—a loss of 1.3 percent.

The U.S. Census Bureau’s American Factfinder website provides estimates of the share of the population in the labor force for each county, specifically for those 16 years of age and over. The data is presented as five-year moving estimates starting with 2009 (2005-2009) with the most recent covering 2017 (2013-2017).  The MSA participation rate was calculated using a weighted average of the county rates.

These estimates place the MSA’s population aged 16 years and over in 2009 at 1,934,482, rising to 1,955,211 in 2015 and then falling to 1,950,671 in 2017.  Over the eight years the net change in the population aged 16 years and older increased slightly by 0.84 percent.

The Census breaks down population counts into seven different age segments:  16-19, 20-24, 25-44, 45-54, 55-64, 65-74 and 75 years and over.  Splitting the MSA’s working-age population roughly in half between the younger (16-44) and the older segments (ages 45 and up) reveals that the younger group of the population fell by 27,487 while in the older portion in the MSA grew by 42,676.

The population aged 16 years and older represents the number of potential members of the labor force.  Bear in mind the definition of labor force. The Census’ glossary classifies someone in the labor force as a person who is not institutionalized that is either working, waiting to start work or actively seeking employment. Those not actively looking for work are not counted in the labor force (for example, retirees).  The Census also provides estimates of the labor force participation rate which represents the proportion of the population that is in the labor force.

Pittsburgh MSA’s labor force in 2009 is estimated to have been 1,195,370.  All figures are five-year moving estimates rather than yearly estimates.  57,870 members of the labor force (4.8 percent) were aged 16-19 years old and 105,675 were 20-24 years old (8.8 percent). Combined they accounted for 14 percent of the MSA’s labor force.  By 2017, when the total labor force reached 1,224,224, the combined 16 to 24 age group’s share had fallen to 13 percent.

Meanwhile for the oldest age brackets, the share of the labor force increased.  For those in the 55-64 age range, 181,376 were in the labor force in 2009 (15.2 percent of the total).  By 2017 there were 237,788 people in the labor force in that bracket (19.4 percent)—the largest increase of any age cohort.  But the second largest jump belonged to the 65-74-year-old age group with an increase from 41,491 in 2009 (3.5 percent share) to 60,916 in 2017 (4.9 percent share).

The age cohort with the biggest decline happened to the 45-54-year group.  There were 309,492 in 2009’s labor force count (25.9 percent of the total).  By 2017, their numbers dwindled by over 42,000 to just 267,400 and accounted for only 21.8 percent of the area’s labor force.

Of course, many factors determine why a person enters/stays in the labor force.  Principal among those are financial conditions and opportunity.  For those at the bottom age rung of the labor force (aged 16 to 19), their family situation may be financially stable enough that they don’t need to enter the labor force as their families can support them.  For the older age groups, it could be health-related, a need or willingness to stay active, finances or changes in the minimum age to claim full Social Security benefits.

Opportunities in the labor market are evidenced by growth or declines in employment statistics. Two measures are provided: the household survey from which labor force estimates are derived and the establishment survey which estimates the number of payroll jobs. As employment begins to increase, people currently not in the labor force are more likely to enter (or re-enter) as they see more and better opportunities for employment. Likewise, when employment falls and good job openings become scarce, some workers will become discouraged and stop actively looking for work.

The U.S. Bureau of Labor Statistics (BLS) publishes monthly employment data for the MSA.  This data has been converted to five-year moving averages (2005-2009) through (2013-2017) to be comparable to the labor force estimates provided by the Census.

In 2009, the number of people employed in the Pittsburgh MSA was 1,146,698, which was the highest level for the period through 2017. The (2005-2009) period represents employment levels before the recession of 2009-2010 began.  The lowest five-year employment, 1,127,661, occurred in 2013 (2009-2013), which includes the very weak years of the recession. By 2017 the employment estimate reached 1,143,631, still slightly below the 2009 reading.

In addition to the finding of very slow growth in the numbers of people working over the 2009-to-2017 period, it is also clear that the workforce is aging dramatically.

Looking at labor force and population counts for persons aged 16 to 54 and those 55 and over reveals substantial changes. In 2009 there were an estimated 1,239,706 people aged 16-54 in the seven-county Pittsburgh MSA.  By 2017 that number had fallen by 82,146 to 1,157,560—a decline of 6.6 percent.  Over the same period, the 55 and older age group grew from 695,776 in 2009 to 793,111 in 2017, a jump of 97,335 or 14 percent.  The average age of the area’s working-age population has become significantly older.

And, of course, there are ramifications for the labor force.  In 2009 there were 962,403 people in the labor force aged 16 to 54.  By 2017 that number dropped by 48,469 to 913,934 (-5 percent).  By contrast, for those aged 55 and up, the labor force count rose from 233,783 in 2009 to 311,643 in 2017—a jump of 77,859 or 33.3 percent. Indeed, the over 55 group accounted for all the net increase in labor force.

National data also shows the older portion of the population growing faster than the younger part from 2009 to 2017.  The population aged 16 to 54 grew by 1.24 percent (2,048,302) while the population 55 and over climbed by 25.3 percent (17,877,686).

And that of course is also reflected in the labor force with the number of people aged 16 to 54 increasing by just one percent (1,302,273) from 2009 to 2017.  Meanwhile, for those 55 and older their ranks in the labor force jumped by 32.3 percent (8,456,866). Nonetheless, national employment was up significantly faster during the 2009 to 2017 period, growing almost four times as fast as the MSA’s one percent.

But while the Pittsburgh MSA lost labor force participants in the younger segment, nationally there was a gain, even if it was marginal.

The fact that the population and labor force participation is skewing older does not bode well for the region.  Job growth in the region over the last decade, whether measured by the household survey or the employer survey (see Policy Brief, Vol. 19, No. 9), has been anemic at best.

Jobs, and the prospects of finding a job, draw people to the area, thereby increasing not only the population but the pool of labor force participants.  Thus, the region would do well to greatly improve its economic policies to make the region attractive to both businesses and job seekers.

Monthly Metro Area Jobs Reports Short on Reliability

The December jobs report for the Pittsburgh metro area was just released.  At first glance, the report on balance seems quite positive. Data from the household survey show a lower unemployment rate, while the employer payroll survey shows a 14,000 increase in nonfarm jobs compared to December 2014. But do the data in the report paint an accurate or reliable picture of the area’s labor market?

 

A deeper look into the household data indicates there might be questions regarding the validity and reliability of the report. In December 2012 the initially reported civilian labor force for the region (not seasonally adjusted) stood just over 1.261 million people, later revised in the spring of 2013 to 1.227 million—a drop of 34,000. Then the initially reported figures for December 2013 showed labor force to be to 1.245 million. Again that number was revised downward, this time to 1.201 million—a decline of 44,000. Then in keeping with the pattern, the initial report twelve months later showed the labor force count for December 2014 to have risen once again to a year to year jump of more than 20,000 to 1.229 million. And once again, a downward revision reduced that number to just 1.195 million, a drop of 34,000.

 

Amazingly, from an initially reported 1,261,000 participants in the labor force in December 2012 to a revised December 2014 count of 1,195,000 the Pittsburgh metro area in just two years has seen the reported number of labor force participants slide by 66,000.

 

Now comes the initially reported figures for December 2015 that place the labor force at 1.222 million.  Given the pattern of downward revisions to the numbers reported over the last three years means the latest labor force count is almost certainly going to be revised to a lower number. However, even if the  December 2015 labor force is not lowered by a benchmark revision later this year it will be very close to the revised 2012 level, which means there has been no net increase in the metro area labor force for three years.

 

If the pattern of downward revisions continues this year, it will mean that in three years, the area’s labor force has actually gone down, assuming of course the revised figures are more reliable than the initially reported numbers. At this point who can be sure? One thing is certain, putting a lot of confidence in the initial reports on the labor force and household employment numbers as a good indication of the state of the labor market is simply not warranted because of the pattern of large revisions.  Of course this is a problem inherent in a methodology that relies on a small monthly sample of households on which to base the estimates.

 

Meanwhile, in addition to the problems in the household survey, there are several glaring issues in the establishment (employer) payroll survey, especially in some of the service producing categories.

 

For December 2015, the recently released report indicates a gain of 17,500 private sector service jobs over the twelve months since December 2014. The largest employment gain occurred in the leisure and hospitality sector (which represents about 11 percent of all private jobs) with a 7,700 rise that accounted for a hugely disproportionate 53 percent of all private job growth between December 2014 and December 2015 (14,500). The initial monthly reports of rapid jobs growth in leisure and hospitality is a long standing trend for this sector.  Sadly, major downward revisions in these jobs are also a long standing trend as we have documented in earlier Policy Briefs (Volume 14, Number 14 and Volume 15 Number 23).

 

Part of the problem is that much of the employment pickup is accounted for by arts, entertainment, and recreation for which there is not enough sampling to provide reliable estimates, so the Labor Department is truly guestimating the job count. As a result substantial downward revisions are necessary almost every year. This has gone on so long it would seem someone at the Labor Department would acknowledge and deal with the problem rather than simply continuing this monotonous pattern of reporting huge gains and then taking them away later with revised data.

 

Another area of questionable data occurred in the education and health services group which added 5,100 jobs over the twelve months ending in December 2015. Education services (does not include public K-12 schools) employment rose by 1,200 jobs while health care and social assistance rose by 3,900 jobs.

 

However, the education services job count looks suspiciously high and warrants closer inspection.  While this sector is up 1,200 jobs year-over-year, its largest and most reliably documented component, colleges and universities, showed a drop of 2,100 jobs.  Thus, employment in the combined remaining education services components (data for individual components are not published) must have risen by 3,300 to offset the decline in college jobs. This group is made up principally of private K-12 schools, education support services firm, and technical schools.  As just mentioned, this group is reported to have had year-over-year growth of 3,300.  This is quite astonishing considering that this group would have had to grow from 14,300 jobs in December 2014 to 17,600 jobs in December 2015—a rise of 23 percent in only twelve months. The absence of any explanation of exactly where such growth is occurring and why it’s so strong makes it hard to accept the numbers as credible.   Downward revisions would seem to be inevitable.

 

Another concern about the jobs data and one we documented in a Policy Brief (Volume 15, Number 44) last year is the fact that the combined employment gains in Pennsylvania metro areas is almost twice as large as the state as a whole.  And adding in the micropolitan area labor markets and county job markets makes the picture even worse with the sum of all the individual labor markets greatly exceeding state totals. Obviously, sampling problems are at the heart of the issue. But the upshot is that downward revisions in most metro area numbers are virtually certain.

 

Finally, it is noteworthy that state government employment across the Commonwealth was reported to have risen by 5,900 jobs from December 2014 to December 2015 after 4,000 job increases in both October and November. In the Pittsburgh metro area state government employment climbed by 700 jobs over the year ended December 2015. Ironically, the state government jobs growth has occurred even though there was no state budget during the last six months of 2015.  It is bad enough that the state continued to spend on all departments and kept everyone employed but it was actually adding to staff and no doubt giving raises while the state funding for public schools in the state was on hold.

 

In summary, the monthly labor market and jobs reports for the Pittsburgh metro area—and doubtless most others across the Commonwealth —must be used carefully because of all the flaws and the enormous amount of revision that occurs every year in the preceding year’s data.

Conflicting News in May PA Employment Report

As often happens, the latest employment situation report for Pennsylvania is a tour de force of opposing signals about the market. The household survey that estimates the number of people who say they are working and the establishment survey that reports the numbers of workers on payrolls could not be more at odds.

The household survey claims 24,000 additional people joined the ranks of self-reported employment in May compared to April, while the establishment survey found a drop of 9,200 workers on payrolls. Moreover, since May of 2012, the household survey shows a twelve month rise of 68,000 people who say they are working while the establishment survey shows a mere 4,700 increase.

The Pennsylvania household survey results mirror the recent national numbers to a large extent. For example, the twelve month gain in Pennsylvania employed was 1.1 percent, exactly the same as the national increase. April to May jumps in labor force in the state and nation were also very close in percentage terms.

Meanwhile, the figures from the establishment survey are quite bleak. The report shows data for ten private industry sectors. Pennsylvania employment in six sectors fell between April and May, two were basically unchanged and only two posted meaningful, albeit small gains-Education and Health and the "Other" services sector.

What to make of this disparate behavior? One explanation offered by some analysts is that many people have decided to become self-employed and are captured by the household survey while being missed by the establishment survey. That has some plausibility. There is anecdotal evidence that underground economic activity has increased during the long period of economic sluggishness. People working "off the books", growth in numbers and size of "flea markets" where new goods are sold, and cash transactions would account here. After all, with millions of illegal immigrants, many of whom are employed, what are odds that a big portion of that activity is not measured by the government’s normal methods?

There is also a question of accuracy of the surveys. The measurement problems inherent in household surveys and its self- reporting that are not as easily verified as are the establishment reports. On any case, there will be major benchmarking update at some point that will likely bring the surveys into closer alignment for a while.

PA Labor Market Develops Signs of Weakness

March’s employment news for the Commonwealth was quite unwelcome. Both the household survey and the establishment payroll survey brought signs of marked weakness in employment.

 

 

People reporting themselves as working fell by 14,000 in March after a 6,200 decline in February and a slight 1,000 drop in January. In short, the entire first quarter exhibited a pattern of steady weakening in the number of people working.  Meanwhile, private payroll employment at establishments fell by 6,500 in March, sliding below the January level and up by a mere 1,000 compared to a March 2012. Indeed, private payroll jobs are still 40,000 below the March 2008 number, the high watermark for a March job count, and just before the effects of the national recession pummeled the state’s labor market.

 

Misguidedly, the headline about the labor market situation was the unemployment rate dip from 8.1 percent in February to 7.9 percent in March. But in light of the fact that the number of people working tumbled by 14,000, it is reasonable to ask; how could the unemployment rate fall?  It fell because the labor force plunged by 33,000. That is to say, an additional 33,000 people in the non-institutional population old enough to work chose not to seek work. While this is a startling number it does mirror the massive half million decline in the nation’s labor force in March. As a result of the 33,000 plunge in the number of people not looking for work, the number of unemployed went down 19,000, mathematically lowering the percentage unemployed.  In sum, the apparent good news of an unemployment rate decline hid the bad news of a significant drop in the number working along with a substantial decrease in the labor force.

 

Why the recent Pennsylvania weakness?  Based on the national employment situation in March, there has been a similar abrupt slowing countrywide.   Apparently, the state has not been able to sidestep the impacts of the forces restraining the national economy-Obamacare effects, the tax hike in January and the regulatory onslaught coming from the DC governing apparatus.   

 

Looking back over the three years of the recovery so far, what was the pattern of job gains and what have been the sources of strength-and recent weakness?

 

From January 2003 to January 2008, private sector employment rose at an average annual rate of 0.8 percent to reach 5,074,400 jobs. Nationally, private employment climbed at a 1.2 percent annual rate over the same period with several states enjoying well above national rates of job gains.  With the steep national recession hitting in 2008, Pennsylvania employment fell to a low of 4,810,100 jobs in February 2010 before starting to rebound. Over the next twelve months, the job count had risen by 110,000, reaching 4,919,000 in February 2011. Between February 2011 and February 2012 jobs grew by 85,000 bringing the two year increase since the recovery began in March 2010 to 195,000. Unfortunately, the solid gain between February 2011 and 2012 marked the end of the good employment growth period. As noted above, from March 2012 to March 2013, private employment managed a statistically insignificant uptick of only 1,000 jobs.

 

The question that arises is: Which sectors accounted for the two years of fairly good gains and which have led the slowdown? 

 

Surprisingly to some perhaps, the professional and business services sector posted the largest pickup in employment from March 2010 to March 2012 registering a gain of 51,200. But for those who follow the data closely it is not a surprise. Over the period 2003 to 2008, this sector actually grew more jobs than the larger and rapidly growing health sector. Rebounding from the recession it recovered all lost employment and added to the pre-recession peak level. Over the past year (March 2012 to March 2013), the sector managed another 3,900 increase-a far cry from the year earlier pace but still a positive contribution to the Commonwealth’s employment count. 

 

Health care and social assistance, the largest individual private sector in terms of employment, supplied 31,200 of the 195,000 total net gain in private employment over the first two years of expansion and was the second largest contributor to the rise. The good news is this sector appears to be recession proof and added another 13,000 jobs over the March 2012 to March 2013 period continuing its decade long upward trend.

 

Close behind health care in job growth, the leisure and hospitality sector (led by accommodations and food service) added 31,100 to payrolls over the first two year period of recovery and rebound from the recession. That strength has not continued, however, as jobs slipped a bit over the last twelve months. 

 

The remainder of the 80 thousand or so increase in private employment from 2010 to 2102 was spread over several sectors each of which experienced gains between 10 thousand and 17 thousand. This list includes construction (+17,000), mining and logging (+14,300), transportation and utilities (+13,000), retail (+10,000), education (+8,700) and manufacturing (+10,100).   

 

Of these sectors that contributed to the burst of solid overall employment gains from 2010 to 2012, only transportation and utilities managed to eke out a modest gain over the last year. Many sectors including mining and logging, construction, retail, finance, leisure and hospitality and the information sector saw employment levels decline during the last twelve months. These declines largely offset the rise in health, professional and business services and transportation and utilities resulting in the slim 1,000 uptick in total private jobs.

 

In short, employment growth at the major job drivers has slowed dramatically while the slower growing sectors have stopped expanding or even slipped into negative territory. This is not a healthy position for the Commonwealth. Unfortunately, there is little the state can do in the short run to boost employment expansion. The weakness in Pennsylvania stems principally from national policies that are restraining the economy.  Policies that deter investment and punish savings, budget deficits that threaten the national fisc together with continuous calls for higher taxes and reams of new regulations daily are having a smothering effect on the economy. Pennsylvania has been fortunate to have had the substantial boost from Marcellus Shell gas operations but that by itself is not enough to overcome the dead weight of the anchor Washington has attached to the economy.

PA Labor Market Develops Signs of Weakness

March’s employment news for the Commonwealth was quite unwelcome. Both the household survey and the establishment payroll survey brought signs of marked weakness in employment. People reporting themselves as working fell by 14,000 in March after a 6,200 decline in February and a slight 1,000 drop in January. In short, the entire first quarter exhibited a pattern of continual weakening in the number of people working. Meanwhile, Private payroll employment at establishments fell by 6,500 in March, sliding below the January level and up by a mere 1,000 compared to a March 2012. Indeed, private payroll jobs are still 40,000 below the March 2008 number, the high watermark for a March figure and just before the effects of the national recession pummeled the state’s labor market.

Misguidedly, the headline about the labor market reports was the unemployment rate dip from 8.1 percent in February to 7.9 percent in March. But in light of the fact that the number of people working tumbled by 14,000, it is reasonable to ask; how could the unemployment rate fall? It fell because the labor force plunged by 33,000. That is to say, an additional 33,000 people in the non-institutional population old enough to work chose not to seek work. While this is a startling number it does mirror the massive half million decline in the nation’s labor force in March. As a result of the 33,000 not looking for work the number of unemployed went down 19,000 lowering the percentage unemployed. In sum, the apparent good news of an unemployment rate decline hid the bad news of a significant drop in the number working along with a substantial decrease in the labor force.

Why the recent Pennsylvania weakness? Based on the national employment situation in March, there has been a similar abrupt slowing countrywide. Apparently, the state has not been able to sidestep the impacts of the forces restraining the national economy-Obamacare effects, the tax hike in January and the regulatory onslaught coming from the DC governing apparatus intent on remaking America.

The Incredible Vanishing Labor Force

So there is joy at the White House. The unemployment rate dropped to 7.6 percent in March from 7.7 percent in February. That is the headline, but as Paul Harvey would say, "Now the rest of the story." Incredibly, the unemployment rate went down although the number of people employed fell by 206,000. How is this possible, one might reasonably ask. Very simple. The number of people working or looking for work-the labor force-fell by 496,000 (the number of people not in the labor force jumped by 663,000). By the Labor Department’s calculation that brings the number unemployed down by 290,000. Ergo, the ratio of unemployed to the labor force dropped. Just a matter of mathematics.

The labor force participation rate, the ratio of those in the labor force to the civilian non-institutional population, dipped to 63.3 percent from 63.5 percent in February-already one of the lowest in decades.

Meanwhile, the number of people with jobs as measured by the survey of establishment payroll counts rose by a scant 88,000 in March with widespread weakness in goods production-manufacturing was down by 3,000 jobs-and service producing employment. Retail jobs tumbled by 24,100, finance was lower, leisure and hospitality was down along with transportation and warehousing. Only the education and health services component and professional and business services demonstrated any significant strength, accounting for over two thirds of all the net increase in payroll employment.

This is clearly a very disturbing jobs report from both the household survey, from which the labor force and unemployment rate data are derived, and the establishment survey that measures the number of paying jobs as opposed to the number of people working or looking for work.

There can be little credence put in claims that the economy is picking up steam, notwithstanding the massive fiscal and monetary stimulus being applied in Washington. There is little doubt that the effects of the tax increase in January and the impacts of the Affordable Care Act along with torrent of regulations emanating from DC are having a chilling effect on the economy.

Analysis of the Strong Labor Force Growth in the Pittsburgh MSA

When the Bureau of Labor Statistics (BLS) released the July household data many were happy to learn that the labor force for the seven-county Pittsburgh Metropolitan Statistical Area (MSA) had reached a high-water mark of more than 1.281 million. The previous high was recorded just one month earlier in June 2012.  How “bullish” a signal is it for the region’s economy?  To answer the question, we’ll need to take a closer look at the data.

 

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Revisions Boost 2011 Job Gains Estimates

When the Pennsylvania Department of Labor and Industry (L&I) issued the January workforce information release for the Pittsburgh metropolitan statistical area (MSA), the household employment data indicated a slowdown in the local economy compared to the brisk pace of 2011, especially the strong growth posted in the fourth quarter.  While this caused a minor stir in the media, of more importance was that January’s data reflected newly re-benchmarked household employment (persons reporting themselves as working) and labor force data for 2011. The updated benchmarks in the household survey data show a more robust labor market in the Pittsburgh MSA in 2011 than was originally reported last year.

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Data Revisions Change Region’s Employment Picture

The Bureau of Labor Statistics (BLS) has revised its labor force estimates for the period 2005 through 2010.  This was done to reflect new Census Bureau population controls, updated input data, new statewide controls, and re-estimation.  While these revisions occur regularly, this latest round of revisions produced fairly large changes in Pittsburgh area data for the number of unemployed, employed and labor force.  These changes show the area’s unemployment rate to have been significantly lower than first reported during much of 2010. 

 

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