Bacon's Rebellion

Democracy Thrives in Sunlight

Virginia’s Labor Force Might Be Shrinking

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by

James A. Bacon
in ,

by Frank Muraca

Last year I responded to a post on Bacon’s Rebellion that raised alarms that Virginia’s economy was “tanking.” I argued that there shouldn’t be concern over the idea that Virginia was on a death spiral while the rest of the nation was facing relative stability. But that doesn’t mean there aren’t concerns with the direction of the state’s economy.

New data shows some sub-par trends in the Commonwealth’s labor market. Numbers released by the Richmond Federal Reserve indicate that Virginia’s year-over-year change hit zero percent in March. In other words, Virginia stopped adding jobs in March. And if the trend continues, we’ll begin losing jobs in the near future.

Graph by the Richmond Federal Reserve.

What’s odd is that the unemployment rate continues to fall over this time period.

Graph by the Richmond Federal Reserve.

So, how can employment be shrinking but also the unemployment rate? One idea is that as the length of unemployment increases, people become discouraged, stop looking for jobs and drop out of the labor force. Data from as recent as 2012 shows that the average duration of unemployment among those who receive benefits rose steeply between late 2011 and early 2012.

Graph by Rui Pereira, College of William & Mary.

This trend is not unique to Virginia. A number of economists and journalists have noted that lower unemployment rates aren’t being matched by growing employment. Bonus: Here’s an interesting chart with updated industry numbers in Virginia.

Chart by the Richmond Federal Reserve.

Government makes up largest share of employment at 18.9 percent, closely followed by professional and business services and trade.

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7 responses to “Virginia’s Labor Force Might Be Shrinking”

  1. billsblots Avatar
    billsblots

    “So, how can employment be shrinking but also the unemployment rate? One idea is that as the length of unemployment increases, people become discouraged, stop looking for jobs and drop out of the labor force. ”

    More accurately, the national administration determines that those people have dropped out of the work force and aggressively drops tens of thousands monthly, making it appear as though the administration is responsible for improving employment and economic conditions. In fact, as you allude to, the larger factor in the drop in unemployment rate is not an increase in people working, but the elimination and disappearing of people who have not been able to find a job in a long time.

    These are Los Desaparecidos of the United States.

    They are still out there. Still unemployed. Still in poverty. But the national government has chopped them over to oblivion for the self serving purposes of the current POTUS. As far as the national government is concerned, they no longer exist, and can’t be allowed to get in the way of the desired political goal of reducing the fictitious unemployment number.

    I’m not certain and should research this part better, but I believe this was instituted about 1994 and has continued as yet another dishonest tactic of many by the national government.

    1. Tysons Engineer Avatar
      Tysons Engineer

      Lol, so 3 administrations spanning both liberal and conservative, yet only the current POTUS is to blame. This is akin to the argument over U1 vs U2 vs U3 vs U4 vs U5 vs U6 which have all been measured for decades, but only for this administration should a different standard be used than, let’s say Bush, Bush, or Reagan. Still find it humorous when Ted Cruz says 90 million people are out of work… including children, elderly retirees, some people who don’t want to work (you know some husbands and wives like being stay at home), etc.

      But by all means GOP, push for child labor and forced employment of married couples 😛

      1. DJRippert Avatar
        DJRippert

        The employment rate dropped by 5% from 63.2 to 58.5) over three years ending in 2010. it has stayed essentially flat since “bottoming out” in 2010. Perhaps one half of that decline can be explained by an aging population. The other half is just a casualty of an economic malaise reminiscent of the days of Jimmy Carter.

        Comparisons with prior administrations fail when the duration of the economic malaise is considered. This has been a recession without the usual recovery. While the recession technically ended a real recovery never started. The highest unemployment rate for any year since 1948 was in 1982. It was not during the so-called Great Recession. It was at the dawn of the Reagan Administration and it was caused by the Carter recession.

        US real GDP growth during the Reagan recover years of 1983 – 1988 was as follows:

        1983 – 4.5%
        1984 – 7.2%
        1985 – 4.1%
        1986 – 3.5%
        1987 – 3.2%
        1988 – 4.1%

        Obama’s record is considerably different. Average annual GDP growth (in real terms) from 2010 – 2013 was 1.95%.

        Obama’s great economic failure to date has been his inability to spark a recovery featuring normal GDP growth rates.

        Some will blame the Republicans (as if the Democrats were great friends of Ronald Reagan when he was in office!). However, others are beginning to suspect a distinctly anti-Keynesian answer:

        http://www.forbes.com/sites/realspin/2013/04/12/the-worst-four-years-of-gdp-growth-in-history-yes-we-should-be-worried/

        The facts don’t lie, Obama’s economic policy has been a failure to date. All presidents get the recession to stop. Good presidents get the recovery to start.

        1. Tysons Engineer Avatar
          Tysons Engineer

          And some presidents start the recession

          My point was not about the rhetoric about job growth. Thats fine. My point was a snarky one directed at people who think that this administration is falsifying employment numbers because they are using the same metrics that every other administration has used for the past 5 decades. Thats just foolish.

          You want to debate the unemployment being artificially down due to loss of workers looking, thats good, I agree, thats a solid debate. You took it to the next level and said the administration has it’s head in the sand saying we are doing great because unemployment is at X. The treasury, the fed, and the president continue to say growth is too slow and much of the issue is people dropping out of the labor force.

          BTW, no discussion about the underground economy’s effect on reported job numbers? How disruptive technologies have affected potential cab drivers for one, through b2b? How about the cost of child care and its effect on the economics for 2 working parents versus 1 working 1 stay at home? If you have to pay 2k for child care (easily) per month for child care it means if you work, then you have to effectively reduce you salary you make by 2k versus a baseline of not working. In the 80s and 90s child care as a percentage of income was MUCH MUCH less.

          All of these are factors. Very little a president does has anything to do with the economy, the good, the bad, it has nothing to do with the executive branch. And the biggest mistakes we have made in our economic history has been thinking it does. You can cry for tax cuts, they did nothing to grow the employment numbers after Bush put in some of the biggest tax cuts in history. You can cry for lesser regulation to industry, now point me to which regulations… go ahead… let me guess Obamacare (which hasn’t even had an affect in anyway for the past 4 years and this year). You cry about infrastructure projects like Keystone XL and its 10k temporary construction jobs, but what about the 50k plus green technology jobs that were created and fought against tooth and nail by the GOP. You want road projects, but no discussion about transit projects which not only act as construction projects but also economic stimulus to draw businesses in with access to larger hubs.

          Come on. Now tell me where I am wrong.

        2. Frank Muraca Avatar
          Frank Muraca

          I actually just read a great description of the different ideas driving continued unemployment: http://www.nytimes.com/2014/05/14/upshot/labor-market-seems-dented-not-broken.html

          There’s two theories that could apply to Virginia.

          1) As DJ points out, Virginia’s workforce is getting older. There’s definitely some solid/easy to find data to back that up: http://frankmuraca.files.wordpress.com/2014/05/percent_change_in_virginia_age_bracket_over_10_years.png

          2) Those who are currently unemployed can’t find jobs because they don’t have the skills to do the jobs that are available. This is a much more structural interpretation that has much deeper consequences then simply “the administration’s economic policies screwed things up.” I don’t know the best way to back this claim up, but I’m sure there is some good research out there that illuminates this point a little more.

          1. larryg Avatar
            larryg

            “1) As DJ points out, Virginia’s workforce is getting older. There’s definitely some solid/easy to find data to back that up: http://frankmuraca.files.wordpress.com/2014/05/percent_change_in_virginia_age_bracket_over_10_years.png”

            plausible.

            “2) Those who are currently unemployed can’t find jobs because they don’t have the skills to do the jobs that are available. This is a much more structural interpretation that has much deeper consequences then simply “the administration’s economic policies screwed things up.” I don’t know the best way to back this claim up, but I’m sure there is some good research out there that illuminates this point a little more.”

            the POTUS himself has pontificated that exactly that lack of skills for the current economy is at issue and it includes not only older workers laid off but brand new folks from high school and college with 20th century educations not 21st century that is needed now and as a result even young people with college educations are working in Starbucks – and getting entitlements to fill the gap.

            the question is what exactly can the POTUS – by himself, without Congress accomplish on this?

  2. larryg Avatar
    larryg

    No POTUS can enact spending.

    When you talk about a POTUS’s “economic policy” what is it?

    If a POTUS advocates a particular economic policy and Congress refuses to enact it – how does that translate into a “failed” policy in terms of something the POTUS had actually implemented – turned into actions stipulated by legislation?

    The POTUS has advocated for policies he supports – Congress has refused to enact them.

    how does that translate into the POTUS “policies”… “failing” if they were never enacted?

    A fair criticism would be that the POTUS – FAILED to convince Congress to enact his policies – fair enough.

    but unlike MOST prior Congresses that usually passed job creation bills in response to recessions – this Congress insisted on austerity.

    can you legitimately blame that on Obama’s “policies” if his “policies”
    were words – never enacted and never implemented?

    when you make a point like this DJ – what is your REAL point?

    you imply that Obama actually did something and it failed.

    but he did not do anything.. other than proposals that were rejected.

    what’s the real truth here? Is it truly that Obama enacted policies that failed? is that the truth?

    I think the truth is he proposed policies and they were rejected and no counter proposals made it back to him – to sign or veto and as a result – we basically have twisted in the wind policy-wise since the recession.

    you can blame that on whoever you wish – but please don’t imply that Obama enacted policies that failed and that simply not true.

    and no I’m NOT defending the POTUS on this. I would make this very same statement about ANY POTUS in the same circumstances.

    you only get economic policies that create jobs – if the POTUS proposes them and Congress enacts them – and then the POTUS implements them.

    truth.

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