Tag: Employment

Data Not Clear About Whether Colorado is Outperforming the Nation in the Recovery

horvath

The wage and salary data produced by BLS shows that Colorado has recovered about 67% of jobs lost as a result of the Great Recession compared to 51% for the U.S.

The LAUS data also produced by BLS tells a much different story.

The Colorado LAUS Data shows that between the 2008 peak and the 2010 trough, Colorado lost more than 135,000 jobs. As of October 2012, the state had recovered only 26% of these jobs.

From October 2011 to October 2012, the LAUS data reports that the number of employed in Colorado has increased by 4,700. Over the past year, state CES employment has increased by 41,600 (NSA) or 42,100 (SA) and those numbers are likely to be revised upwards. For the numbers to reconcile, this disparity suggests that at least 37,000 contract workers, sole proprietors, or family businesses went out of business over the past year.

The U.S. LAUS Data shows that between the 2008 peak and the 2010 trough, the U.S. lost more than seven million jobs. It has since recovered 67% of these jobs.

From October 2011 to October 2012, the LAUS data reports that the number of employed in the U.S. has increased by 3.1 million. Over the past year, U.S. CES employment has increased by more than 1.922 million (NSA) or 1.949 million (SA). The differences between these numbers can be reconciled, as the difference can most likely be attributed to the growth of contract workers, family businesses, or sole proprietors.

The LAUS data shows that Colorado has recovered 26% of the jobs lost during the Great Recession compared to 67% for the U.S.

These results raise yet another red flag about the LAUS data published by the Colorado LMI, CDLE, and BLS. Click on the following dates for a review of the downturns for the 1980s and the late 2000s.

©Copyright 2011 by CBER.

Stagnancy in the Size of the Colorado Labor Force – The Lost Decade and Beyond

horvath

In a previous post, the topic of discussion was the stagnancy of the labor force during the 1980s (click here). In that case the size of the labor force was flat for about five years because of a regional recession, weak wage and salary job growth, and negative net migration. This post will look at the size of the labor force during the Great Recession and beyond.

Local Area Unemployment Statistics (LAUS) are available for Colorado beginning in 1976. Since then, the month-over-prior month labor force increased about 87% of the time (383 of 442 months). In a vibrant economy, periodic ups and downs are expected, but increases in the size of the labor force are generally the rule of the thumb.

Between April 2000 and October 2012 there were 30 months with decreases in the month-over-prior month size of the labor force. In January 2008 there were 2,722,015 workers. By April 2009 the number had risen to 2,758,468 workers.

During the past 42 months, there were 19 month-over-prior month declines. There were 2,725,803 workers in the October 2012 labor force. This was 32,665 fewer than the level in April 2009 and essentially the same as January 2008.

Next, we will look at three data sets for the period: Wage and Salary job growth, Net migration, and the Unemployment Rate.

For the years, 2009-2012, wage and salary job growth was devastating, with back-to-back net job losses in 2009 and 2010. The net change in wage and salary jobs follows:
• 2008 19,000
• 2009 -104,700
• 2010 -23,300
• 2011  33,000
• 2012 est  45,000

Unlike the 1980s, when the state experienced negative net migration, there has been solid positive net migration, i.e. more people moved into the state than out of it. The net migration follows:
• 2008 45,000
• 2009 36,300
• 2010 37,000
• 2011 34,900
• 2012 est 36,800

For this period the unemployment rate varied from 4.8% to 8.0%. While the monthly rate has dropped from a high of 9.0% in 2010, the 2012 annual rate remains the same as it was in 2009.
• 2008 4.8%
• 2009 8.1%
• 2010 8.9%
• 2011 8.3%
• 2012 8.0%

For all intensive purposes, the size of the labor force will be about the same as it was at the end of 2009 and the number of employed and unemployed workers will be similar.

• The 33,000 wage and salary jobs added in 2011 lowered the unemployment rate by 0.6% points, yet growth of 45,000 jobs in 2012 will lower it by 0.3% points.
• For the period 2008 to 2012, total net migration was 190,000; approximately 125,000 of these individuals are 16-65 years old.

This raises a series of questions:
• How many people have become contract or 1099 workers? How many have become sole proprietors and owned family businesses? How many people are working temporary jobs? Will they still work in this capacity when the economy recovers or will they take wage and salary jobs?
• How many workers have stopped working who don’t show up in the data?
• What are the in migrants doing? Did they take jobs that Colorado residents might have taken? Are they working in other capacities?
• How many families with dual incomes now only have one income?
• Have the published unemployment numbers been manipulated to meet political agendas?

There seem to be more questions than answers and the numbers do not seem to reconcile. As grave as the employment situation has been, it appears that the unemployment rate may be inaccurate and may have understated the magnitude of the problem.


©Copyright 2011 by CBER.

Stagnancy in the Size of the Colorado Labor Force – 1980s

horvath

The unemployment rate is one of the most popular, but overrated statistics for measuring the performance of the economy. It is such a crude measurement of economic performance that the state’s labor economist was recently quoted in the media as saying that it shouldn’t be taken at face value.

The calculation of the unemployment rate is simple. The number of unemployed workers is added to the number of employed workers (wage and salary, sole proprietors, and others) and that equals the size of the labor force. The unemployment rate is simply the number of unemployed workers divided by the size of the labor force.

In other words, the size of the labor force is a key component in determining the accuracy of the unemployment rate. This brings us to the topic of this post – the size of the labor force.

Local Area Unemployment Statistics (LAUS) are available for Colorado beginning in 1976. Since then, month-over-prior month labor force increased about 87% of the time (383 of 442 months). In a vibrant economy, periodic ups and downs are expected, but increases in the size of the labor force are generally the rule of the thumb.

There are two periods when the size of the labor force did not increase, during the 1980s and the late 2000s. The following analysis looks a period during the 1980s.

Between September 1984 through April 1989 the size of the labor force declined in 29 of 53 months.

In August 1984 the size of the labor force, as measured by LAUS data,  was 1,719,239. It declined sharply in 1985, bounced back for most of 1986, and fell sharply in 1987. It remained flat for much of 1988 and into the first part of 1989. In June of 1989, the labor force was reported at 1,719,824. From that point, it continued to grow.

Next, we will look at three data sets for the period: Wage and Salary job growth, Net migration, and the unemployment rate.

During this period, Wage and Salary (CES)  job growth was weak, with net job losses in 1987. The net change in wage and salary jobs follows:
• 1984   75,100
• 1985   16,400
• 1986  -10,400
• 1987       4,300
• 1988    23,500
• 1989    46,200
• 1990    38,600

The CES and LAUS series are different measures of employment, but they should tell a similar story about changes in employment.

During this period the state experienced negative net migration, i.e. more people moved out of the state than into the state. The net migration follows:
• 1984      2,782
• 1985      5,172
• 1986     -5,270
• 1987   -13,997
• 1988   -24,280
• 1989   -18,752
• 1990   -12,964

For this period the unemployment rate varied from 5.4% to 7.5%. It remained at a higher than normal level because unemployed workers were able to move outside the region and find work. The annual unemployment rates for this period were:
• 1984   5.4%
• 1985   6.0%
• 1986   7.5%
• 1987   7.5%
• 1988   6.4%
• 1989   5.6%
• 1990   5.1%

The labor force was stagnant for about five years for the following reasons:
• There was a regional recession
• Weak wage and salary job growth
• Negative net migration.

A similar stagnancy in the size of the labor force occurred during the 2000s. It is more difficult to understand and will be discussed in a later post (click here).


©Copyright 2011 by CBER.

“Don’t Get Excited” About the Addition of 7,000 Colorado Jobs in September

horvath

In its latest state-level jobs report, the Bureau of Labor Statistics stated that Colorado gained 7,000 jobs in September, on a seasonally-adjusted (SA) basis. This inordinate gain comes on the heels of a loss of 100 jobs in August.

The quirky nature of the data prompted Colorado’s chief labor economist to report to the Denver Post that the state shouldn’t get “too excited about the addition of 7,000 jobs in September”. It is unlikely that this wide swing in jobs is an accurate measure of what is happening on the streets. Rather, it is the result of adjustment factors that don’t fully capture “seasonal” changes in the economy. Unfortunately, Colorado’s Labor Market Information agency has chosen to use the SA data set as the foundation of its monthly labor reports.

A look at the non-seasonally adjusted data (NSA) shows that Colorado has added an average of 38,800 workers through the first three quarters of the year. The year-end data shouldn’t be too far off that mark, before revisions. Final revisions, made by BLS in March of 2013 and 2014, will likely be in an upward direction since the non-farm, or wage and salary data typically understates growth during periods of sustained growth.

Overall job growth is broad based with the strongest absolute growth occurring in the following sectors:
6,700 Tourism
5,900 Private, Education, and HealthCare
4,700 Professional, and Scientific, and Technical Services
4,700 Retail Trade
4,400 Construction
4,100 Employment Services
3,100 Manufacturing

The following sectors posted absolute job gains that were more moderate:
2,400 K-12 Education
1,800 Extractive Industries
1,700 Wholesale Trade
1,500 Higher Education
1,300 Corporate Headquarters (MCE)
1,300 Personal (Other) Services

Minimal change was recorded in the following sectors:
800 Financial Activities
300 B-to-B (Not Employment Services)
Flat State (Not Higher Education)
-200 Utilities
-400 Transportation & Warehousing

More significant job losses were reported in the following:
-400 Transportation & Warehousing
-700 Federal Government
-2,300 Local Government (Not K-12)
-2,400 Information

Average employment for the first quarter of the year was 47,300 greater than 2011. At the time that level of increase did not seem realistic or sustainable. In April, job growth dropped off to a rate that was in line with the sluggish growth of the U.S. economy.

Average employment for the past six months has been 34,600 and the range of year-over-year job gains has varied from 31,200 to 37,100. It seems realistic to expect similar job gains through the end of the year.

For more detailed analysis of the Colorado economy go to cber.co.

©Copyright 2011 by CBER.

Are We Better Off Now Than We Were Four Years Ago? – The United States

horvath

During this election season the politicians have raised the question, “Are we better off now than we were four years ago?” It is easy to find data that supports or rejects the notion that “we” are better off today, but it is difficult to provide a clear cut answer either way.

U.S. Output
• Real GDP output is stronger than 4 years ago, although it is increasing at a less than desirable rate.
• Since 1930 Real GDP has increased 64 of 82 years, or 78% of the time. It has declined in back-to-back years from 1930 to 1933, 1945 to 1947, 1974 to 1975, and 2008 to 2009. It is very simple. Because the U.S. population is growing there is increased demand for goods most of the time, hence increased output.

U.S. Debt
• From 1966 to 2000, the Federal debt rose from $.3 trillion to $5.8 trillion. By mid-2012 it has reached almost $16 trillion.
• From Q3 2008 to Q4 2010 consumers began deleveraging. Since then, they have continued to take on debt at a pre-2008 pace.
• While an argument can be made that it was necessary for the U.S. to incur a portion of the debt to prevent a depression, it is difficult to justify the over-consumption by consumers.

U.S. Employment and Unemployment
• During the 69 months between January 2007 and September 2012 the U.S. lost jobs in 31 months and gained jobs in 38 months.
• In 2012, total U.S. employment is below total employment in 2008; jobs are being added at a faster rate than they were in 2008.
• In 2012 the number of jobs added is trending upward, whereas it was trending downward in 2008.
• The number of unemployed workers is much higher in 2012 than in 2007 and 2008.
• The unemployment rate in 2012 is much higher than in 2008.
• In 2012, the unemployment rate and the number of unemployed workers is trending downward, whereas, it was trending upward in 2008.
• Since 1940 U.S. employment has increased 54 of 72 years, or 80% of the time. Five of the 14 declining years have occurred in the past decade (2002-2003 and 2008-2010). The increase in population coupled with the increase in demand for goods and services has generally resulted in an increase in jobs.

Financial Well-Being
• The 2012 Credability Consumer Distress Index is above the 2008 level and trending upwards (this is good news).  Consumers are still “At Risk.”
• Health Care Coverage – The 2011 percentage of coverage is slightly below the 2008 level.
• Dow Jones Industrial Average – the DJIA is about 4,800 points above its level at this time (October) in 2008.
• Housing prices – Nationally, 2012 housing prices are below 2008 levels.

Transportation
• Average gas prices for 2008 were $3.21 per gallon. Through the first 44 weeks of 2012, average prices are $3.57 per gallon.
• After bottoming out in early 2009 U.S. auto sales have trended upward and are approaching 15 million a year.  Sales in 2012 are better than 2008.

For more detailed analysis of the state of the economy compared to four years ago, visit https://cber.co or click here.

 

©Copyright 2011 by CBER.

Lackluster Job Growth on Tap for Remainder of 2012

horvath

Through the first 8 months of 2012 there are 39,125 more jobs in Colorado than last year.

The average for the first 3 months was 47,300 workers with a drop-off in the next five months to 34,200.

In other words, the state is on track to hire between 35,000 and 40,000 for the year.

Two things could cause this number to drop below 35,000:
• BLS could make significant changes in future revisions. This is not likely given a recent announcement by the BLS that the recovery has been underestimated, i.e. employment numbers will be revised upwards.
• The economy could fall off a cliff as a result of an unforeseen event (9/11, Katrina, war, etc.).

Annual employment is calculated by averaging monthly employment for a 12 month period. Similarly, the annual change is the average of the month over same month differences.

As mentioned, the average change for the first 8 months of this year is 39,125 jobs and the average monthly change is trending downward. If that downward path continues the annual average will approach 35,000.

A look at several scenarios shows the change the last four months of the year will have on the 2012 average :
• If an average of 40,000 jobs is added for each of the last four months, the current average will change very little; it would increase slightly to 39,400.
• If an average of 30,000 jobs is added for each of the last four months, the annual change will be 36,100 jobs.
• If an average of 20,000 jobs is added for each of the last four months, the annual change will be 32,800 jobs.
• If an average of 10,000 jobs is added for each of the last four months, the annual change will be 29,500 jobs.
• If an average of 0 jobs is added for each of the last four months, the annual change would drop to 26,100.

At this point it seems likely that average employment for the last four months will be 30,000 or higher. While there are potential headwinds that could put the economy in a tailspin, it appears unlikely that will happen in the remaining four months.

There are two reasons to be optimistic about the final quarter. In a matter of weeks, the election will be over and the country can begin to move past the rhetoric of the campaign and start to chart a path for the next four years. Second, the the National Retail Federation recently announced that it expects holiday sales to be 4.1% greater than last year. Despite the high unemployment rate there are more people working and there are signs that some of Colorado’s volatile industries are rebounding. Sales growth at this level is a positive indicator, at least for the next three months.

While it is easy to complain about the state’s lackluster job growth of 35,000 to 40,000, it is important to keep in mind that 15 years ago Coloradans were complaining about all the people moving to Colorado and the accompanying cone zones.  Wouldn’t it be nice if we could have it both world – strong job growth and no cone zones?

For cber.co’s latest update on the Colorado economy click here.

©Copyright 2011 by CBER.

State Economic Agencies Point to Slower Growth in 2013

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The Colorado Legislative Council (CLC) and the Governor’s Office of State Planning and Budgeting (OSPB) recently released their Q3 economic updates. As can be surmised by their names, CLC and OSPB provide comprehensive economic information and forecasts to inform discussion about the state and national economies.

Their most current updates show the two groups are upbeat about the economy for 2012. At this point, they are much less optimistic about the prospects for 2013.

CLC
National Employment
2012  1.3% growth and 133,100,000 employees
2013  0.6% growth and 133,900,000 employees

National Unemployment
2012   8.3%
2013   9.1%

State Employment
2012  1.7% growth and  2,296,600 employees
2013   0.7% growth and 2,312,700 employees

State Unemployment
2012   8.3%
2013   9.4%

OSPB

National Employment
2012  1.3% growth and 133,000,000 employees
2013   0.8% growth and 134,100,000 employees

National Unemployment
2012  8.3%
2013  8.2%

State Employment
2012  1.7%  growth and  2,296,700 employees
2013  1.0%  growth and 2,320,300 employees

State Unemployment
2012  8.0%
2013  7.8%

There are notable differences between the two forecasts for 2013. This begs the question, “Are the two groups intentionally presenting best and worst case scenarios or are their differing viewpoints a legitimate indication of the diverse landscape?”

For more information about updates from OSPB click here.

To view the forecast for CLC click here.

For the most latest cber.co monthly update for Colorado click here.

 

 

©Copyright 2011 by CBER.

Colorado Job Creation Remains Lackluster

horvath

The recent release of the Bureau of Labor Statistics’ Business Dynamics (BDM) dataset shows that Colorado job creation remains weak.

Unlike other job statistics, which report the change in net jobs, the BDM statistics measure gross job gains and gross jobs lost. The data is derived from the Quarterly Census of Employment and Wages, which explains why the lag in reporting is about 7 to 9 months.

Gross job gains were weak during 2010 and 2011, averaging 127,691 for the eight quarters. During the 7 previous quarters (Q2 2008 through Q4 2009), average quarterly gains were 124,895. This period included much of the 2007 recession. On average, gross job gains have been about the same for the period 2007 through 2011.

For the eight quarters in 2010 and 2011, average job losses were 120,452. By comparison, average job losses were 148,913 for the seven prior quarters (Q2 2008 through Q4 2009).

For 2010 and 2011, net job gains were primarily a result of reduced jobs losses and weak job gains. A variety of factors are responsible for this lack of job creation and ultimately the slow recovery.

In the chart below:
Heavy horizontal blue lines represent average gross gains for the period.
Heavy horizontal red lines represent average losses for the period.
Light blue lines represent quarterly totals (same as previous charts).
Light red lines represent quarterly totals (same as previous charts).

For additional information on the Colorado go to https://cber.co/CBEReconomy.html.

©Copyright 2011 by CBER.

Colorado State Government Employment Bucks National Trend

horvath

Across the country, state governments are slashing budgets and cutting the size of their state workforce. That is not the case in Colorado.

State employment has two components: Higher Education and State Government. Over the past two years, cber.co has reported how the Higher Education workforce has grown for the past decade.

As can be seen in the chart below, Colorado State Government employment (excluding higher education) has reported steady growth since 2004. This is contrary to the trend for the aggregate total of all states.

What lies ahead for state workers? Are these increases justified? Will the Governor continue to add workers to his team over the next year as revenues increase? What makes Colorado different from other states? Will state jobs reliant on federal funding be trimmed as adjustments are made to the federal budget? If the state population increases by 80,000 to 100,000 people every year, won’t it be necessary to add state workers to provide essential services for them? Will the state experience a post recession drop off in workers, as was the case in 2002-2004? How will the elections impact the future of the size of Colorado’s government?

Two sources are recommended for tracking the fortunes of the Colorado State Government: the Governor’s Office of State Planning and Budgeting and the Colorado Legislative Council provide quarterly updates of the state economy and finances.

To learn more about the challenges facing government leaders across the country, read The Report of the State Budget Crisis Task Force. The report focuses on six states but illustrates problems that exist in Colorado.

For additional information on the Colorado go to https://cber.co/CBEReconomy.html.

©Copyright 2011 by CBER.

Colorado Unemployment Rate Up for Fourth Month in a Row

horvath

The Colorado unemployment rate rose for the fourth consecutive month and reached 8.3%. While the BLS indicated that this increase was not statistically significant, it is certainly significant to incumbents seeking re-election in November.

The unemployment rate is a metric that the public pays attention to. They view it as a sign that the economy is not improving – as promised. Specifically, more than 225,000 people are unemployed in Colorado.  The never-ending talk about the fiscal cliff, additional easing by the Federal Reserve, and other doom and gloom projections add to the concerns of the electorate and the woes of incumbents.
The increase to 8.3% is significant for another reason. This is the second consecutive month that the state unemployment rate has matched the U.S. Over the past decade, the Colorado rate has often been a half to a full point lower than the U.S. rate. Seldom has Colorado’s rate been equal to or higher than the nation.

The basic reason for the rise in the rate is that the size of the labor pool increased. In other words, a greater number of people began looking for jobs. Even though the public and private sector have been adding jobs for the past two years, they aren’t being added fast enough to absorb all of the interested workers.

On a positive note, initial job claims are declining. That means there are fewer layoffs.

Continuing claims are also trending downwards – ever so slowly. That means people are either finding work or their benefits have expired. The former is a positive sign, while the latter is not.

The most recent data release shows that after seven months, an average of 40,000 jobs have been added, or about 3,300 jobs per month. Two factors could cause 2012 employment to be less than 2011 (Last year the state added 33,000 jobs).

BLS periodically and systematically revises the unemployment and employment data. Revisions to the data could push the 2012 total downward (an upward revision is unlikely).

As well, there could be a downturn in employment. If employment drops to a monthly average of 23,000 for the last five months then the annual total would be 33,000, or the same as 2011.

The good news is that gross job losses appear have declined, there has been a slight increase in gross job gains, and more people are looking for work. While this scenario is not ideal, it is much better than having a rise in the unemployment rate caused by a drop off in gross job gains and an uptick in gross job losses.

 

©Copyright 2011 by CBER.