Metro Atlanta’s unemployment rate jumped to 7.3 percent in May, a largely seasonal surge as newly minted college and high-school graduates entered the labor market.
A month earlier, the jobless rate stood at 6.5 percent. A year ago May, it was 8 percent, according to the Georgia Department of Labor.
Last month’s upturn notwithstanding, employment prospects for Atlanta’s jobless are apparently improving. But are they really?
Many economists don’t consider the employment rate the truest barometer. Other indicators — the labor force participation rate, the employment-to-population ratio and the job openings and labor turnover survey, or JOLTS — offer more nuance and insight, they say. Those measures also paint a decidedly darker picture for metro Atlanta.
The unemployment rate, for example, only measures the number of people who don’t have a job but have actively looked for work the last four weeks. It doesn’t count thousands of metro Atlantans who’ve dropped out of the workforce for any number of reasons, such as frustration, additional schooling or caring for a loved one.
“Right now the unemployment rate is a very misleading measure because of the dynamics of today’s labor market,” said Heidi Shierholz, an economist with the Economic Policy Institute in Washington. “The overall labor force is dropping because of an unprecedented set of — quote, unquote — missing workers … people who would be in the labor force if job opportunities were stronger.”
The labor force participation rate measures the number of Americans older than 16 who are actively seeking work or have a job. During a recession, many people who aren’t employed get discouraged and stop looking for work, which decreases the participation rate.
Georgia’s rate stood at 62.7 percent last month, according to the labor department, about the same as the rate nationwide. A decade ago, Georgia’s rate was 68 percent.
“People have limited economic opportunities given this weak labor market and are finding alternative ways to make ends meet,” said Jeffrey Wenger, an economist at the University of Georgia who says the rate should be at least 10 points higher. “They’ll either do odd jobs or, if worst comes to worst, apply for government aid like disability.”
The participation rate began dropping prior to the recession. Shierholz, said societal and demographic changes partly explain the slide. College enrollment rose dramatically until recently, for example. And the Baby Boom generation began retiring just as the recession kicked in.
“But the participation rate is low right now because we’re in this historically weak period of job growth (with) a giant pool of missing workers,” Shierholz said.
She prefers the employment-to-population ratio, which divides Georgia’s total working-age population by those actually employed in the state’s labor force. The current ratio for workers 25 to 54, their prime earning years, is 76.4 percent, little changed since the recession ended five years ago.
“It’s a very simple measure. It doesn’t get into whether or not you’re jobless or looking for a job or not,” Shierholz said. “While the ratio is improving, it’s agonizingly slow. Over the last couple of months it’s dropped, but I don’t think it’s on a downward trend. We’re still in a very deep hole.”
Economists across the board hail JOLTS, the labor turnover measure, as a demand-side barometer of employment. The survey, conducted by the federal Bureau of Labor Statistics office in Atlanta, takes the hiring pulse of 16,000 employers nationwide. Data include total employment, job openings, hires, layoffs, firings and “quits,” when an employee leaves a job most likely for another.
“It really gives a sense of the other side of the equation, and that is (that) you don’t get a job unless someone wants to hire you,” Wegner said. “When job openings go up, you get a better understanding of how much labor demand is out there.”
In April, there were 4.5 million job openings, according to the survey, twice as many as April 2009 when the economy stunk. The quits rate too has risen, though sluggishly, since the recession ended.
“That’s a signal of confidence in the labor market,” said John Robertson, a senior economist with the Federal Reserve Bank of Atlanta. “We look for increases in the quits rate as increasing confidence of workers saying there are better opportunities for work out there.”
Robertson’s team compiles the Labor Market Spider Chart, a combination of 14 employment measures including unemployment, job openings, temp hirings, initial jobless claims and workers who are marginally attached to the economy.
“Overall, things are getting better,” Robertson said, “but we’ve still got quite a way to go.”
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