Tag: Occupations

The Decline in Colorado’s Unemployment Rate – Good and Bad News

horvath

The Bureau of Labor Statistics released their latest job numbers for Colorado earlier today and there were no surprises. Growth continues to be solid and the unemployment rate is trending downward.

It is great to see the overall rate of unemployment drop; however, there is a downside. Barring a recession, the rate is likely to continue to drop to the 4.0% range over the next couple of years and remain at that level for an extended period of time. We have very quickly shifted from an employer’s market to a job seekers market.

The rate of unemployment for some occupations is now below 3.0%, for example, the management and professional occupations. It is good news that business is strong; however, it is bad news because it is not possible to find enough qualified workers to produce goods or provide services.

Since all industries require managers, the shortage of people to fill management occupations crosses all industries. The shortage in some professional occupations is in Colorado’s high-tech sector. It is good news there is growth, but bad if it hurts the local economy.

Nationally, the food preparation industry is another example where there is a substantial decrease in the unemployment rate. Over the past year the rate has dropped from 8.8% to 7.1%. This means it will be more difficult for many of the state’s restaurants to find an adequate number of workers.

As the construction industry has improved, the unemployment rate in the construction and extraction occupations have fallen from 14.3% to 9.8%.

While that is good news, it is estimated that 700,000 construction workers have left the industry. In other words, there is a shortage of trained workers.

The good news that is associated with the declining unemployment rates means there will be greater competition between industries for workers.

Eventually this will result in increased wages. That is good for the workers, but may cause the price of goods and services to increase.

Such is the case in economics, it seems that every story has an upside and a downside.

Colorado is on track to add 71,000 jobs in 2014.

U.S. Occupations with Low Unemployment Rates

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The U.S. unemployment rate has finally dropped below 7.0%, yet there are occupations where the rate of unemployment is well below the natural rate. An unemployment rate of 4.5% to 5.5% is often referred to as the natural rate. (Milton Friedman and Edmund Phelps developed the concept of the natural rate in the 1960s to describe the rate of unemployment where the economy operates most efficiently.)

The occupations with the lowest unemployment rates are Healthcare practitioners, Computer, Legal, Education, and Math. Many of the 10 occupations require a college degree. On the other hand many of the occupations that have levels of unemployment above 5.0% have minimal education requirements or they require only on-the-job training. For example, a laid off construction worker may not have skills that are transferable to being a software developer. As a result some occupations, such as construction workers, may consistently have higher unemployment rates.

On a positive note, the unemployment rate has declined in 7 of the 10 categories. Interestingly enough, the number of unemployed workers in these 10 categories has increased from about 2.0 million to 3.0 million over the past year. Most likely that is a result of increased hiring, volatility in companies, and job churn.



 

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