Georgia unemployment rate drops a notch

By Michael E. Kanell

The Atlanta Journal-Constitution

The jobless rate in Georgia ticked down slightly last month, but state officials say it’s because many people have apparently either stopped looking for work or left the state.

Unemployment in August was 10.2 percent, dipping from a record 10.3 percent the month before. The report should not be read as a sign that the labor market has begun improving, the state Labor Department said Thursday.

“The slight decline in the August unemployment rate appears to be a bit of positive news,” said Michael Thurmond, state labor commissioner. “However, a closer examination reveals that the reduction was primarily due to work force shrinkage.”

Though the unemployment rate is probably the most watched labor indicator, it can be misleading. In general, it is better to see it fall. But the rate often rises when the economy is improving and it can drop when things get worse.

That is partly because of the way the rate is compiled.

Each month, the government surveys households and then estimates how many people are out of work and actively searching for a job. The same survey is used to estimate how many people are working, and the numbers are crunched into the rate.

But the calculation does not include anyone who goes back to school, stays home with children or becomes too discouraged to look. And of course, it doesn’t include people who move.

When hiring is scarce and the pool of job seekers deep, many people leave the labor force. But when word gets out that hiring has started again, many of those people may return to the job search — sending the unemployment rate up.

Since the recession began, Georgia’s labor force has shrunk by 1.6 percent — 79,039 people, Thurmond said. The combination of wholesale layoffs and anemic hiring has pushed the number of unemployed workers in Georgia up to 481,588 — roughly double what it had been, he said.

During that same period, according to a separate government survey of companies, the state has shed 7.5 percent of its jobs.