Jobs are the central focus of much of the population these days. Unemployment is high, but not scary high, in Lexington. Still, hovering in the mid to high 7s, the current unemployment rate is roughly double what we averaged in the middle of the 2000s. 2009 is when the recession really took effect on the employment picture locally. As you can see below, the unemployment rate followed a fairly normal seasonal cycle in the first part of 2009. Unemployment almost always spikes following the holiday retail season, dips in April, then rises throughout much of the summer. What made 2009 abnormal was that after the April dip, the unemployment rate jumped over 1.5% between April and June, reaching a high of 8.5%.
So how is 2010 shaping up compared to 2009? Retailers definitely shed quite a few jobs following the holiday retail season, and they shed those jobs much more quickly in 2010, accounting for the high unemployment rate in January 2010. Following that peak in January and February, the unemployment rate has slowly made its way down to an April low and was rising slightly as the summer began in June (the most current month we have data for).
Lexington’s economy has stayed relatively resilient – even in the face of a continually poor economy nationwide. While it may be a while before we see enough job creation to soak up the effects of both a growing population and the monumental employment shift of the recent recession, it is my hope that Lexington can first begin to return to a normal unemployment seasonal cycle. This may herald an end to the present effects of the nation’s economy on our own, even if it doesn’t immediately remedy all the issues we face as a legacy of the nationwide recession of 2008-09.
Throughout the economic crisis, which some have taken to calling
This has been a year of firsts for a lot of individuals in the business community. Those of us on the younger side of life have certainly never seen an economic collapse like this one and even the older population will probably struggle to remember anything comparable this side of the Great Depression. As I tracked the numbers during the start of the recession late last year, I had a cautious optimism that Lexington wouldn
So if you read my previous post, you were witness to a little careless analysis on my part regarding the reasons for the larger than average drop in the unemployment rate between August and September. My theory was that due to to a larger than average drop in the labor force, there was a possibility that discouraged workers might have been a real factor in the drop in the unemployment rate. This would make the drop a little artificial – an artifact of the methodology and not necessarily a good sign.
While I try very hard not to explicitly link data to real-world conditions (correlation does not imply causation), it is still sloppy because I was only looking at the denominator in the equation, not the numerator. If there were simply a drop in the labor force, it would have made unemployment go up, not down. Let’s take a little deeper look at what constitutes the unemployment rate.
The unemployment number reported monthly is from the LAUS or Local Area Unemployment Statistics. It is an offshoot of the CPS or Current Population Survey. The CPS essentially functions to place people into one of three groups on a monthly basis. So for the civilian (i.e., non-military) non-institutionalized (i.e., non-incarcerated/committed) population, you can be either employed, unemployed, or not in the labor force.
Employed means that during the week that includes the 12th day of the month being surveyed, you did any work as a paid employee, worked in your own business or on your farm, or worked 15 hours or more as an unpaid worker in a family business. You also qualify as being employed if you were temporarily absent because of vacation, illness, bad weather, childcare problems, maternity or paternity leave, labor-management dispute job training, or other family or personal reasons, whether or not you were paid for the time off or were seeking other jobs. Oh, and if you have more than one job, you only have to be employed at one of them to count.
Many people assume that the remainder of people who aren
A bit of a respite in unemployment terms. The official unemployment rate for Fayette County dropped .5% to 7.7%. This is along seasonal change lines (there is often a drop between Aug and Sept) but it was also a bit more than expected. This means two things to me: one, employment following seasonal trends is a good thing. When employment is following seasonal trends, it often means that it there are no other major forces acting on it. Two, if I expected unemployment to drop around .2% and it dropped by .5%, that gives me hope that we may have eliminated some of that excess unemployment that we have racked up during the recession. Here is a visual view of what I am talking about:
From February when we were about 3% above normal, to June/July/August when we were about 4% above normal, Lexington still managed to follow it’s normal seasonal trends. From the averages of the rest of the years in this decade, one would expect September unemployment to drop around .2%. So it is definitely good news that it dropped farther than that.
So you may be asking yourself, “Self, what about the labor force? Is this drop in unemployment due to a large number of people dropping out of the labor force (i.e., no longer looking for work)?”
Well I’m glad you asked, because I did the same thing with the labor force that I did with the unemployment rate – with one caveat. Because Lexington is a population growth city, the labor force naturally grows as well. So I had to normalize it by using the average percent change instead of the raw number. Here is what I found:
It does look like that a contraction in the labor force may have played a role in the greater than anticipated drop in the unemployment rate. The average percent change from August to September is a positive .08%, whereas this year, it was a negative .26%. I still stand by my statement that a drop in the unemployment rate is a good thing. However, like most things, it has to be taken with the grain of salt that the labor force contracted. I’ll continue to keep an eye on the trends and keep my fingers crossed that our nagging unemployment problem will eventually subside.