Kyle Wingfield

Political commentary and opinion from The Atlanta Journal-Constitution's conservative blogger

Jobs are up, but so is the jobless rate. What's going on?

More jobs? Check.

Fewer initial unemployment-insurance claims? Check.

Fall in the number of long-term unemployed? Check.

Lower unemployment rate? Well ...

Georgia's jobless rate bottomed out in April at 6.9 percent. Since then it has gone up unexpectedly, hitting 8.1 percent in August according to figures released today. During that time, the number of non-farm jobs reported has grown by 41,400, to the highest mark since June 2008. Unemployment claims have continued a four-year downward trend (see nearby graph). The number of people out of work for 27 weeks or more is down by more than 9,000 since April.

The number of private jobs rose between July and August by 8,100; the number of government jobs by 16,600 (mostly seasonal education employees returning to work with the beginning of the school year). Employment rose in goods-producing industries (5,700) as well as service industries (19,000). Manufacturing and construction, two sectors hit hard by the Great Recession, continued their upward trend.

And yet, the number of people counted as out of work was also up. What's going on?

Most likely, the operative word here is "counted." To count as being unemployed in government statistics, you have to be actively looking for work. When you don't think there's any work to be found, you're more likely to drop out of the labor force.

Labor-force figures for August won't be reported until tomorrow, but from April to July that number grew by about 11,000, which is consistent with more people looking for work. It doesn't match up completely with the number of people reporting themselves as out of work and looking for work (38,718 during those months), but keep in mind the labor force also changes when people move from one state to another, retire, return to school, etc. No single factor will explain the entire change, and some of them offset one another.

(UPDATE: It turns out the labor-force figure is available for August. Just like last August, it fell slightly -- about 0.2 percent this time -- and was basically flat from April to August. The foregoing reasons the labor force can change still apply.)

Consider the last time Georgia's unemployment rate was as high as 8.1 percent -- exactly a year earlier, August 2013, when it was 8.2 percent. Here's how the underlying data have changed during those 12 months:

  • Number of jobs: grew by 79,300
  • Number of unemployed: fell by 4,370
  • Number of long-term unemployed: fell by 35,000
  • Number of initial UI claims: down by 4,381

The headline unemployment rate would tell you things are virtually the same as a year ago. Yet, 79,300 more Georgians are working, and 4,370 fewer Georgians are unemployed despite the indications more discouraged job-seekers are returning to the labor force. I'd say a lot has changed for the better.

Job-market strength also shows up in places like government revenues. In August, the state reported income-tax withholding payments rose by 4.1 percent while sales tax receipts rose by 6.9 percent. Those just aren't the kind of real-time numbers that point to a slowing labor market or economy.

It's worth pointing out that from 2011 to 2013, Georgia's unemployment rate for August was eventually revised downward by an average of 0.3 percentage points, while our rate for July was revised downward by an average of 0.2 points. The Bureau of Labor Statistics won't release its recalculations for this summer until February, so we don't know how accurate these numbers are. (Side note: The AJC's news side had a story just last week explaining why some economists say the government's methodology for calculating the jobless rate makes it an "increasingly unreliable" metric.)

Absent a lot of news about employers around the state shedding workers -- when, instead, employment news has generally been about companies' hiring -- it's hard to get too worried about that curious jobless rate.

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About the Author

Kyle Wingfield joined the AJC in 2009. He is a native of Dalton and a graduate of the University of Georgia.