Columbus Chamber Blog: Information about economic development, economic and business trends, Columbus workforce, programs, events and the Chamber of Commerce in and around Columbus, OH

Some happy employment news

We now have preliminary Columbus MSA employment numbers for May and they are surprisingly good.  On a seasonally-adjusted basis, jobs in the region increased 2,300 (0.25 percent) from April.  The national job total decreased by exactly the same 0.25 percent, but this was the smallest national job decline since last September.   The largest local gains were registered by professional and business services, which has been a little soft lately but gained 2,300 jobs in May, and private education and healthcare (up 1,600).  Government and manufacturing lost 800 jobs each and retail lost 700.  Other sectors showed modest changes up or down of 100 to 300 jobs each.  Since the recession began, the local area has lost 19,000 jobs (2.0 percent), much less than the national loss of 4.3 percent and Ohio’s 5.3 percent.

The May regional unemployment rate was a seasonally-adjusted 8.5 percent, nearly a percentage point lower than the U.S. rate of 9.4 percent.  These two rates were essentially equal in January.  The Ohio rate, meanwhile, was 10.8 percent.

Before we get too excited, it is important to remember that these employment totals are preliminary and will be revised next month.  But it is clear that the Columbus region continues to fare far better than elsewhere in this recession.

The Doctor Is In: The Unemployment Rate and Reality

Today the Bureau of Labor Statistics released initial estimates of U.S. employment and unemployment for May (actually the second week in May).  As usual, the headlines are focusing on a single number, the unemployment rate, which rose to 9.4 percent from 8.9 percent in April.  This is a very easy number to communicate and fits well into a headline.  But for a couple of reasons, the unemployment rate is not the best gauge of the status of the economy, either nationally or locally.

For one thing, changes in the unemployment rate are driven both by changes in employment and changes in the labor force – equivalently, the number of people working and the number of people looking for work.  This latter number is defined in a very specific way: you are looking for work – and in the labor force – if you have actively sought employment within the last 30 days.  If you have not, you are not counted at all.  (These totals are estimated from a monthly survey of households called the Current Population Survey.)  In reality, being available for work is not a yes-no question; it is a more-or-less question.  For this reason, the labor force fluctuates from month to month as people who do not work steadily step up or step down their job search.  This can cause some odd results.  In April, the number of people looking for work jumped, leading to the largest monthly percentage increase in the labor force since November 2007.  This caused a fairly big increase in the unemployment rate (8.5 percent to 8.9 percent) even though the estimated number of people working actually increased slightly.  In May, the number of people fell back somewhat while the labor force increased again, producing the unemployment rate increase to 9.4 percent.

Just the opposite can happen as well.  The initial estimates for the Columbus region during mid-2003, as the labor market was bottoming out after the last recession, showed employment and labor force both declining.  But because the labor force was falling faster than employment, the unemployment rate was declining.  People were asking me, “The unemployment rate is falling at last.  Isn’t this great?”  My reply was, “Well, no.”  Actually, this is the worst of all possible worlds: jobs were declining and workers were expecting not to find work, so they were not even looking.  Conversely, the increases in labor force we have seen during the past three months are a sign that workers may be expecting jobs to be easier to come by during the summer.  Thus, the unemployment rate increases aren’t quite as bad as they seem.

That leads to the second problem with the unemployment rate: it understates the pain as the economy worsens.  As jobs disappear, people stop looking for them, which puts downward pressure on labor force and the unemployment rate.  Thus, the unemployment rate increases less in a recession than it would if the number of discouraged workers weren’t increasing.  If people hadn’t dropped out of the labor force over the course of the current recession, the May unemployment rate would have been an even 10 percent.

A much better labor market indicator is the total number of jobs (nonfarm payroll employment).  This declined in May by “only” 345,000 – half the 700,000-job pace between December and March and the smallest decline since last September.  It is hard to imagine the disappearance of 345,000 jobs being good news, but that is a sign of the current times.

We will get local payroll employment estimates for May in two weeks, but thus far we are weathering the recession fairly well.  From the beginning of the recession through April, U.S. employment fell 4.2 percent, while Columbus region employment fell 2.1 percent – again, good news only in context.

First Quarter Economic Update - Things Could Be Worse

The Columbus MSA continued its better-than-average employment performance during the first quarter.  Although preliminary March statistics show that the region lost 4,600 jobs during the first three months of 2009, the 0.5 percent loss was less than one-third the 1.6 percent U.S. decline.  Employment growth in most individual sectors was also stronger than average.  The worrisome decline in transportation – a crucial sector for us – paused, with a net gain of 500 jobs (1.0 percent) .  Most other individual sectors turned in better-than-average performance, including retail, financial activities, and professional and business services, each of which registered small net gains locally while continuing to decline nationally.  Since the beginning of the recession in December 2007, the Columbus MSA’s job loss has been 1.9 percent – little more than half the 3.7 percent national average. Read the full quarterly economic update here.

The Doctor is In: Civic Engagement

I had the great pleasure recently of speaking to an Ohio State University undergraduate class called “Civic Engagement.”  This class, led by Julie Graber, helps students explore the role of community involvement in their chosen career, whatever that may be.  The principal activity is to attend the weekly forums of the Columbus Metropolitan Club, and discuss and critique the presentation of the issues raised in those forums in class meetings and reports. 

The topics of my lecture included an introduction to the Columbus Chamber; the Attract and Retain Talent initiative; the redevelopment of downtown Columbus; and an overview of the regional economy – sort of a Columbus Economy 101. 

This last topic is especially important because of the misperceptions that many of us have regarding what makes this region’s economy tick. Here are some of the highlights:

• Good population growth, now and in the future
  • Columbus MSA population, 7/1/08: 1.773 million
    • Growth since 2000: 160,000 (9.9%)
    • Ohio growth since 2000: 133,000 (1.2%)
  • Second fastest-growing major (1 million+) MSA in the Midwest (out of 10).
    • 24th fastest-growing nationwide (out of 75).

• Ohio Department of Development projects continued growth to 2030.
  • Current 1.1% population growth rate expected to continue.
  • 2030 population: 2.25 million, up nearly 500,000.
  • Presents challenges for land use planning, transportation, infrastructure

• We are doing better than average in the recession.
  • Recession began December 2007.
  • Since then, we have lost 15,000 jobs (1.6%).  U.S. has lost 4.4 million jobs (3.2%).
  • Likely explanation: We missed the boom.
    • Employment growth weaker than average 2003-2006.
    • House price growth far less than average.
  • One measure suggests our house price trend is now among the strongest of any major market in the U.S.
  • I expect job losses to continue into 2010, but at a slower-than-average rate.

• A longer-term view:  What makes our economy tick?
  • Lots of misperceptions about this.
  • Some myths are unhelpful, others are dangerous
    • The myth of the “recession-proof” Columbus economy.
  • Focus on “driver” industry sectors.
  • Greater-than-average employment or output, growing faster than average.
    • Implies factors that give these firms a competitive advantage here.
  • Serve markets outside the region, bring dollars into the region (“export” sectors).
    • The only way to increase income, standard of living.

• Key economic drivers
  • Transportation and logistics
  • Manufacturing
  • Business services
  • Creative industries
  • Finance and insurance
  • Life sciences and healthcare

A series of posts will follow explaining the Columbus Region's key economic drivers.

The Doctor is In: Some good employment news

The preliminary estimate of jobs in the Columbus Metropolitan Statistical Area shows a net gain of 2,200 jobs (0.2 percent) in February. This is amazing given that the U.S. lost 651,000 jobs (0.5 percent). Nationally, only three sectors gained jobs: education and health care, leisure and hospitality, and government. Locally, each of these gained, as did construction (!), wholesale, retail, financial activities, and business services. It bears repeating that these estimates are preliminary and will be revised later this month. But indications so far are that the recession is not affecting us as badly as it is affecting other regions. Since the recession began in December 2007, our employment has declined at less than half the national rate: a total loss of 1.4 percent locally, 3.2 percent nationally. U.S. employment declined in each of the 14 months through February, while local employment rose in six of those months. Locally, the only sectors that have done worse than the national average so far are construction, transportation and utilities, leisure and hospitality, and government.

What’s going on here? I think the most likely explanation is that we are being less affected by the recession because we were less affected by the boom. Our job growth was less than average in each of the years between 2003 and 2006, and only slightly better than average in 2007. House prices never exploded here as they did elsewhere. We looked enviously at the national trends earlier in the decade, but it seems that we are now better off for not joining in the hysteria.

The Dr. Is In (Economic Trends and Analysis from Dr. LaFayette)

As the Columbus Chamber’s economist, my focus is tracking the economic and workforce changes that impact our eight-county region.  I am excited to be able to share these developments in an immediate way through this new blog.  My posts will include the monthly changes in our region’s employment and unemployment, population changes, information on our region’s output, national-level developments, and anything else that seems of interest.  I am also planning to include thoughts on what these numbers tell us – and what they don’t.  I will continue to produce a variety of detailed reports and fact sheets that will give more details.  Please let me know your thoughts – or post a comment – and by all means feel welcome to suggest topics of interest!