2017-07-13 / Business

Why unemployment rate is misleading

COMMENTARY /// Labor market
By Bruce Stenslie
Special to the Acorn

The California Labor Market Information Division recently released its May 2017 report, showing an improvement in Ventura County’s unemployment rate from 4 percent in April to 3.8 percent in May. Just to be clear, 3.8 percent is a stunningly strong number.

Looking back to 2000, we bettered this only twice, at 3.7 percent in May 2006 and May 2001.

Historically, May has been our strongest month each calendar year, registering 3.9 percent in 2000, 3.7 percent in 2001, then after a rise post-9/11, went down to 4.1 percent in 2005 and 2007.

For a look at the current month data, go to www.labormarketinfo.edd.ca.gov.

Before the recession, a 3.8 percent unemployment rate would have been heralded as “full-employment,” indicating that everyone who wanted a job could get one. The high number of jobs and competition for workers meant higher wages.

As much as we appreciate 3.8 percent unemployment, we’re not seeing those conditions. That’s not a Ventura County thing; rather, it’s a larger, even national phenomenon.

Concentrating on Ventura County, what we’re seeing is:

Slow job creation, narrowed almost exclusively to health services, leisure and hospitality.

Declining labor force participation, down by 8,600 workers over five years, nearly flat over 10 years.

Wages are stagnant as the mix of jobs is increasingly concentrated in low-wage hospitality and services.

The result is that the economic recovery is failing to distribute its benefits of wealth and opportunity broadly to workers. Or, put another way, a smaller and smaller share of the county’s residents are finding economic prosperity through work.

So how did we get to 3.8 percent unemployment in May?

We lost 1,300 workers from the labor force. Unemployment dropped not because more workers found work but because fewer were looking for work. Total employment per the household survey is down in May by 1,100.

We had a net gain of only 100 jobs, down 900 in farm and up 1,000 in the nonfarm sectors.

There were no big swings in the nonfarm sectors, with three sectors accounting for most of the losses:

Manufacturing down 200, though still up 200 year-over-year.

Retail trade down 400 and down 1,300 year-over-year, on a slow but steady slide.

Professional, scientific and technical services are down 400. This is a concern because these tend to be high-wage jobs, but not too concerning as the sector has largely stayed even in number over the last several years.

For gains, we have four sectors worth highlighting:

Construction gained 100, continuing its slow but positive rise. What’s most interesting here is that the gains are highly concentrated in the specialty trade contractors sub-sector, good news for skilled labor and good wages.

Educational and health services gained another 500, up a whopping 3,600 year-over-year or 8.1 percent.

Leisure and hospitality up by 400 in May and by 2,500 year-over year or 6.8 percent.

Government up by 600, though by only 400 year-over-year, in a broad mix of state and local government.

For more information, call Bruce Stenslie, EDC-VC, at (805) 384-1800, ext. 24, or email stenslie@edc-vc.com.

Bruce Stenslie is president/ CEO of the Economic Development Collaborative-Ventura County.

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