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Albany employment numbers deceiving

By   /   July 5, 2011  /   Comments

On Thursday, June 23, the Georgia Department of Labor released their May labor report for Metro Albany. It showed the unemployment rate increasing from 9.8 percent to 10 percent. While a quick glance would appear that our local labor market took a step back relative to the rest of the state, I would assert that Albany’s job market is improving at a faster rate than the state and our nearby competitors.

While it’s true that the non-seasonal unemployment rate for Georgia increased from 9.6 percent to 9.7 percent, I believe a closer look at the numbers show that Albany actually outperformed the state with their monthly job growth rate doubling Georgia’s (+0.6 percent compared to +0.3 percent).

In the month of May, the grand opening of Wal-Mart occurred and that event obviously excited the local populace. The expectation of 275 new jobs from Wal-Mart likely drew more people, who previously dropped out of the labor force, back into the labor force. Their presence in East Albany will undoubtedly lead to more development in the area and that should be positively reflected in future numbers.

In calculating the unemployment rate, it does not include discouraged workers, who are individuals who drop out of the labor force due to frustration in not finding work. However, Wal-Mart’s grand opening probably encouraged more people to reenter the labor force and this will misleadingly cause the unemployment rate to rise when job prospects have actually improved.

In a given month, there are more people entering the labor force than leaving it. If an individual is a full-time student and not working, then they are not included as being part of the labor force. However, they will likely seek work upon graduation. Since May is a month where many students graduate, we should see more reentry into the labor force than usual. Therefore, a decrease in the unemployment rate can only occur if there is enough job creation to find work not only for the previously unemployed, but also to handle to new entrants into the labor force.

Even with the slightly higher unemployment rate in May, Albany should be encouraged with the progress made over the last year. Consider the state of Georgia. In May 2010, Albany’s unemployment rate was 10.6 percent relative to the non-seasonal state average of 9.8 percent, which was a difference of eight-tenths of a percentage. Now our unemployment rate of 10 percent is only three-tenths of a percentage higher than Georgia’s 9.7 percent. A look at job growth numbers over the last 12 months explain why that is the case. While Georgia lost 28,300 jobs (-0.7 percent) over the last year, Albany gained 1,600 jobs (+2.6 percent).

How about Valdosta? We have heard about their advances relative to Albany and those numbers are borne out in terms of the unemployment rate. However, the gap has closed. Consider in May 2010, Valdosta’s unemployment rate was much lower than the state average at 8.3 percent and a whopping 2.3 percent lower than Albany. Now as we look to May 2011, we see that Valdosta’s labor force has actually shrunk by 485, while Albany has expanded by 2,023.

This tells me that Valdosta’s current unemployment rate of 8.7 percent is likely understated with the reduced labor force suggesting a higher rate of discouraged workers relative to Albany. Regardless, the unemployment gap between Albany and Valdosta is now 1.3 percent, which is a significant difference from a year ago. That can be explained by Valdosta’s disappointing loss of 1,100 jobs since last year.

A look toward Macon and Columbus paint a similar picture. In May 2010, both Macon and Columbus enjoyed an advantage in the unemployment rate gap, but it has been reduced over the last year. Macon’s unemployment rate is now even with Albany after being 0.6 percent lower a year ago. As for Columbus, their unemployment rate of 9 percent was 1.6 percent lower than Albany in May 2010. Now the gap has been reduced to 0.9 percent now. Columbus’ decline of 1,300 jobs lost over the last year is the primary factor for that and this figure also suggests that they are also seeing a higher increase in discouraged workers.

In summary, Albany’s job market is far from ideal, but it should be emphasized that our prospects are improving relative to the rest of the state.

Aaron Johnson is the assistant Professor of economics at Darton College, where he also serves as director of the small business management program. He publishes a blog at econprofaj.blogspot.com.
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Owner / Editor / Writer

Tom Knighton is the publisher of The Albany Journal. In November, 2011, he became the first blogger to take over a newspaper anywhere in the world. In August of 2012, he made the difficult decision to take the Journal out of print circulation and become an online news agency, a first for the Albany area.

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