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Economists cast doubt on unemployment figures



Published: Wed, April 23, 2014 @ 12:00 a.m.

By Tom McParland

tmcparland@vindy.com

YOUNGSTOWN

The most recent unemployment data for the Mahoning Valley suggested a sharp decline in the jobless rate, but some economists said the numbers could be misleading.

According to figures released Tuesday by the Ohio Department of Jobs and Family Services, the Valley’s unemployment rate for March fell to 6.9 percent, compared with 8.5 percent a year ago.

Columbiana County saw the greatest improvement in its unemployment rate, which fell from 8.4 percent a year ago to 6.6 percent in March. Unemployment was down from 8.5 percent to 7 percent in Mahoning County, and Trumbull County’s jobless rate improved to 7.1 percent from 8.5 percent last March.

It was the first time the Valley’s combined unemployment rate slipped below 7 percent since 2008, but economists cautioned against taking the figure at face value.

“I think that’s statistical noise,” said Mekael Teshome, economist for PNC Bank.

The reason for Teshome’s concern was a civilian labor force that declined by 2,000 from March 2013.

“That drop [in the unemployment rate] wasn’t entirely for the right reasons,” he said. “A declining labor force doesn’t have anything to do with a healing economy.”

The labor force, the sum of employment and unemployment, has been falling in year-over-year comparisons, reflecting both an aging work force and discouraged workers dropping out of the job market.

If those workers had stayed in the labor force as unemployed, the jobless rate would have been considerably higher.

Still, Teshome said the overall trend of falling unemployment is a positive one, but the rate of recovery is more moderate than the ODJFS figures would suggest. The economy likely will stay on a slow and steady track throughout 2014, aided by improving national and global economic climates, he said.

The number of unemployed in the Valley last month fell by 4,200 to 17,800, and employment rose by 1,600 from last March, the data showed.

But Cleveland-based economist George Zeller argued that the estimates were fundamentally flawed.

State- and county-level unemployment figures, he said, are based on a statistical models, and not a sample of Ohio businesses, which makes them more prone to being inaccurate and unreliable. The county estimates must add up to the statewide total, which was wrong in this case.

According to statewide figures released Friday, the number of employed Ohio workers rose by 12,000 in March and the number of unemployed dropped by 24,000. Meanwhile, the state reported only 600 new jobs last month.

“How can we have an improvement of 36,000 workers in the unemployment estimate when Ohio only gained 600 jobs? There is a simple answer to that one: We can’t,” he wrote in an email.

“If the Ohio statewide total is wrong, such as it is this month, then all of the figures for counties are wrong, too,” he said.

The error was not meant to be intentionally misleading, but it was the result of inadequate funding for the government agencies responsible for collecting the data every month, he added.

All three counties registered lower numbers of unemployed than last year, and in all three counties, the civilian labor force dropped. Only in Columbiana County did the number of employed fall — a decrease of 300 from last March.

Mahoning and Trumbull counties recorded gains of 1,000 and 900 jobs, respectively. That was a clearly positive sign, said Tod Porter, an economics professor at Youngstown State University.

Yet he agreed with Zeller and Teshome, saying the economy is slowly and steadily improving as it claws its way back from the Great Recession. But Porter pointed out that all three counties now boast thousands fewer jobs than they did before the recession hit.

“The key is whether we are going to keep moving in this direction in a consistent way,” he said.

Ohio’s seasonally-adjusted unemployment rate in March was 6.1 percent, down from 6.5 percent in February and 7.3 percent a year ago. The national rate fell to 6.7 percent, unchanged from February and down from 7.5 percent in March 2013.


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