Jobless rate falls; more stop searching

Bucyrus Telegraph Forum - January 21, 2012
   

by Russ Zimmer

The state’s unemployment rate dropped sharply for the second consecutive month, but, once again, it’s not all good news.

The Ohio Department of Job and Family Services reported the unemployment rate fell to 8.1 percent in December. That’s down from 8.5 percent in November and a 28-year high of 10.6 percent in December 2009.

As with the previous month’s report, the plummeting rate has more to do with people giving up their job searches than with the unemployed getting work.

From November to December of last year, 21,000 fewer people were employed or seeking work, the second-steepest drop since the summer of 1983. The steepest? October to November, when 23,000 people disappeared from the labor market.

A reduction in the number of available workers can make the employment situation sound better when it hasn’t appreciably improved.

For example, Ohio had its third-largest drop in the unemployment rate in 30 years in December, yet job gains were paltry at best.

The monthly telephone survey used to determine the unemployment rate showed a gain of 5,000 jobs, while a different survey — the Current Employment Statistics Survey, a monthly sampling of more than 12,000 employers — showed the number of employed people decreased in December by 3,300.

There were 91,000 fewer unemployed people, but also 85,000 fewer people in jobs or looking for ones.

Ohio State University economist Bruce Weinberg said there is some overlap there.

“Nationally you have increases in employment rather than decreases in the number of people looking for jobs,” he said. “You have more people in Ohio who are giving up looking for jobs and don’t count as unemployed.”

Ben Johnson, spokesman for the Ohio Department of Job and Family Services, said there is no way to know from the state’s estimates why the labor force is smaller. Some people may have opted to return to school or retire early, either of which would remove them from the work force count, he said.

But, he said, many are undoubtedly discouraged workers and their continued departure from the job market underscores the slow pace of economic recovery.

“We do not want to see the labor force shrink. As part of the economic recovery, we expect the labor force to grow,” he said. “That hasn’t really happened yet.”

Weinberg said this pattern is unexpected in an economic recovery.

It’s counterintuitive, but unemployment rates often go up in a recovery as discouraged workers re-enter the labor force because they are once again optimistic. While searching, they are once again counted as unemployed, rather than not counted at all.

Last month, when the unemployment rate plunged by a half point for almost identical reasons, the news was received warmly by the majority party. This week’s news brought similar responses.

“OH’s unemployment fell again, this time to 8.1%. It’s headed the right direction but we’ve got to get more Ohioans working,” read a tweet from Gov. John Kasich.

Bill Batchelder, Ohio speaker of the House, and state GOP Chairman Kevin DeWine released separate statements giving credit to Kasich and House Republicans.

“Job creation has always been our number-one priority and our work from this session is truly bearing fruit,” Batchelder’s statement said.

Opponents argue the rate drop disguises underlying problems with Ohio’s economy.

“Investment in our economy has been too small, and recovery has been too slow. We see the consequences of austerity playing out in our labor force, and too many Ohioans becoming discouraged,” said Hannah Halbert, policy liaison with liberal think-tank Policy Matters Ohio.

Jobless rate falls; more stop searching

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