According to the Bureau of Labor Statistics, Georgia’s August unemployment rate was the worst in the nation.
The state’s seasonally adjusted rate was only 6.9 percent in April, but it rose steadily from that post-recession low to 8.1 percent in August.
The increase has been met with consternation around the state. Gov. Nathan Deal suggested the increase is a result of some sort of conspiracy to hurt Republican-led states.
Following the lead of Labor Commissioner Mark Butler and senate candidate David Perdue, other political commentators have downplayed the significance of the increase in the unemployment rate and have urged Georgians to focus on the data showing a steady increase in payroll jobs in the state.
The estimates are actually drawn from two separate surveys. The survey of payroll establishments determines the headline job number that we’re used to seeing each month. The household survey is the basis for the unemployment rate and other characteristics about the labor force.
For years, Georgia Department of Labor press releases have asserted firm causal connections between the two surveys, so it wasn’t surprising last week that so many commentators applied the same flawed logic in their attempts to make sense of the apparently conflicting numbers.
So this column is going to take a closer look at the job market in the Savannah metropolitan statistical area (Chatham, Bryan and Effingham counties) and see what the numbers are telling us.
Unemployment insurance initial claims
In addition to the estimates from the two surveys, we can also see how many initial claims have been made each month for unemployment insurance. Of course, not all claims are valid, and the numbers can be affected by everything from adverse weather to the number of business days in a given month.
But, in general, we expect to see the year-over-year numbers decline when the job market is improving. In August 2014, there were 1,078 unemployment insurance claims in the Savannah metro area, down from 1,195 in August 2013.
That’s a decline of almost 10 percent, which should be an indication of a strengthening job market.
Payroll employment
According to the payroll survey, employment in the Savannah metro area was 165,300 in August 2014. That’s up a solid 2.4 percent from a year earlier.
The job gains were concentrated in leisure and hospitality, in professional and business services and in transportation, warehousing and utilities.
Manufacturing and construction continue to stagnate.
Statewide job growth has been dominated in recent months by relatively strong numbers in Atlanta, Augusta and Savannah. Smaller metro areas and rural parts of the state are generally posting low gains or even losses.
Keep in mind that all the numbers are estimates. They’re the best numbers we have, but they are subject to large revisions.
Also keep in mind that the survey of establishments with payrolls misses many Americans. For example, the self-employed, freelancers and private contractors are generally not counted in the survey, and a wide variety of temporary and even unpaid workers don’t necessarily show up in the numbers either.
The unemployment rate
The household survey used to determine the unemployment rate is almost always more volatile than the establishment survey. We can see some pretty dramatic and largely inexplicable swings from month to month, so we need to focus on long-term trends.
Generally, apparent discrepancies between the two surveys will work themselves out over time. Some commentators lose sight of this trend, while others confuse seasonally adjusted estimates with estimates that have not been adjusted to reflect ordinary seasonal patterns. Even accounting for expected seasonal patterns, the household survey has in recent months been painting a much less robust picture of the Savannah area job market than the establishment survey.
According to the estimates released last week, there were 182,771 people in the Savannah metro area labor force in August. Of those, 168,546 were employed. That works out to a local unemployment rate of 7.8 percent, up from 7.6 percent in August 2013.
These estimates have not been adjusted for seasonality, so expect the rate to decline in September, which is typically a stronger month for hiring.
While the payroll survey shows strong job growth over the past year, the household survey shows only small increases in the size of the labor force and in the number of area residents with jobs.
I need to be careful here, but I suspect that both of those household survey estimates — both the total labor force and the total employed — are too low. That doesn’t mean, however, that the unemployment rate is necessarily way off base.
The Savannah metro area unemployment rate in August was lower than the statewide rate and the rate in most other Georgia metro areas.
However, the local unemployment rate is still high, and the even higher statewide rate deserves serious attention from politicians, not dismissive conspiracy theories.
It’s also worth noting that the metro area unemployment rates across Georgia look positively rosy compared to the rates in rural areas. In August, 48 of Georgia’s 159 counties had unemployment rates over 10 percent. Another 31 counties had rates between 9 and 10 percent.
That’s pretty grim news, and there seem few reasons for optimism about the job market across large swaths of Georgia.
City Talk appears every Tuesday and Sunday. Bill Dawers can be reached via billdawers@comcast.net. Send mail to 10 East 32nd St., Savannah, Ga. 31401.