State unemployment rate drops, but shrinking workforce a factor

Written by Dave Gallagher | The Bellingham Herald | January 16, 2013

Here’s a news release from the Employment Security Department about the state unemployment rate. It’s interesting to note that while it dropped, a big factor is that a significant number of  job seekers have given up looking for work.  Whatcom’s unemployment numbers are expected to be released next week.

OLYMPIA – Washington’s estimated unemployment rate reached its lowest point in four years in December, at 7.6 percent, down from a revised seasonally adjusted rate of 7.7 percent in November.

The original estimate for November was 7.8 percent.

However, an Employment Security Department economist cautions that recent declines in the unemployment rate have been due largely to a shrinking labor force, as unemployed job seekers stop looking for work.

The unemployment rate represents the percentage of the labor force that’s unemployed and actively looking for work. People who quit looking for work are not counted as part of the labor force when calculating the unemployment rate.

“Our population is growing and we’ve regained more than half of the jobs lost during the recession, but the number of people in the labor force has been declining,” said Joe Elling, chief labor economist for Employment Security. “When the labor force shrinks, it artificially lowers the unemployment rate.”

The total number of employed and unemployed workers in Washington has fallen 60,000 since employment reached its low point in February 2010, about half of that in the past year. Meanwhile, the total number of jobs has grown by about 115,000 in the past three years, out of a recession loss of about 205,000 jobs.

Preliminary data for December 2012 showed a preliminary, seasonally adjusted drop of 7,900 jobs. But Elling said there was weak response to the employer survey in December, and the number may be revised when late-arriving data are factored in.

Industries with the most estimated job gains in December were construction, up 3,100; leisure and hospitality, up 1,400; education and health services, up 500; and wholesale trade, up 200.

Industries showing the most job losses last month included government, down 4,700 jobs; retail trade, down 4,100 jobs; professional and business services, down 1,900; other services, down 1,500; and manufacturing, down 900.

In December, an estimated 262,500 people (seasonally adjusted) in Washington were unemployed and looking for work. That includes 148,264 who claimed unemployment benefits last month.

Also in December, 4,186 unemployed workers ran out of unemployment benefits, bringing the total to 125,627 since extended benefits were activated in July 2008.