11-25-14 – And The Private Sector Shall Lead Them

Posted by Chris Campion

The Vermont Department of Labor recently published the October 2014 unemployment numbers, showing an unemployment rate of 4.4%, matching September’s adjusted rate of 4.4%.  But let the Commissioner’s Message speak loud and clear so all can understand what’s going on with employment in Vermont:

Vermont employers are reporting increased opportunities throughout the state. During the summer months, there appeared to be some signs that the economic expansion was slowing.  Recent data from Vermont businesses are pointing in a different direction — towards ongoing economic growth in which jobs are being created and filled; and it is the private sector leading the way.

First of all, let’s correct the Commissioner’s thinking here:  There are 200 more unemployed people in October than there was in September.  That doesn’t seem to comport with the idea that businesses are “pointing” in a different direction, if, indeed, businesses are allowed to “point” in directions othen than that the State Board of Business-Pointing approves of in its annual review process.

An increase in the number of unemployed – and seasonally adjusted, by the way – does not reflect a “different” direction.  In fact, if you look at the state’s own numbers on this (which apparently the Commish here is not wont to do), the October 2013 to October 2014 trend in the number of unemployed is going up, not down.  Numbers courtesy of the VT Dept. of Labor:

It's pointing in a direction, all right.

It’s pointing in a direction, all right.

Vermont’s labor force is holding more or less steady at 350.6K, without a lot of variation in 2014.  The ideal situation would be a growing labor force, though, not a “hold steady” – and just to keep things in perspective, Vermont’s peak labor force for the last 38 years was in March 2009, at 361.8K.  It has gone downhill from that peak number ever since.

To compare that highest historical labor force number to 2014, the lowest monthly total in 2014 was 350,150 in August.  This means our labor force 5 years ago was roughly 10,000 people stronger than it is today – yet we’re told we’re heading in a “different direction”.  Well, the direction is different, that’s for sure – it’s different from what Vermonters would like to see.  This can more simply be called The Wrong Direction.

Similar numbers are reflected in the prior year as well:

Looks a lot like this 2014, for some reason.  Golly.

So, to help the Commissioner out, here’s what Vermonters really want (and yes, I’ll claim to speak for all of them today):

– A growing labor force.

– Higher number of employed Vermonters.

– Lower number of unemployed Vermonters.

That’s what Vermonters are looking for, not claims that Vermont is creating and filling jobs.  Because Vermont isn’t doing that, it’s that simple.  How can you tell?  Let’s try looking at averages for the Labor Force, Employment, and Unemployment for the past 5 years (Oct-Sept timeframes):

The number of unemployed drops, but so does labor force participation - which gives VT it's magically low unemployment numbers.

The number of unemployed drops, but so does labor force participation – which gives VT it’s magically low unemployment numbers.

While the number of unemployed is dropping, it drops in direct correlation to the number of people dropping out of the labor force.  The Employed number remains fairly steady for 5 years, yet the number of people in the labor force is dropping – which means that the jobs outlook is not improving, or you’d see a higher number of employed people, regardless of the labor force participation rate.

What’s also interesting is that while the state claims that the private sector “led the way” (as if this should be a unique event in Vermont’s economic history; shouldn’t that always be the goal?), the state’s seasonally adjusted data shows that gov’t “led the way” at an almost 2-1 margin from September to October.  Total non-farm gain was 900 jobs, with 600 from the government sector, and 300 from the private sector.

Is this what leading from behind looks like?

If this is what constitutes good economic news for Vermont, I’d really hate to see what bad news looks like.

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