By James Clary
Hampton Roads unemployment rate remained at 6.71% on a seasonally adjusted basis, 2.12% below the nation’s unemployment rate and down significantly from the 7.67% peak of April 2010. This decline of the unemployment rate represents several trends operating within the Current Population Survey (also called the household survey) data.
Local area unemployment statistics survey individual households to determine if individuals in that household are in the labor force (either having a job or actively looking for a job), and then if they have found a position. The household survey does an excellent job of capturing those who consider themselves self employed (including professionals such as independent lawyers) as well as those employed at newly created businesses. The unemployment rate is calculated by dividing the number of persons who are unemployed by the total labor force, and as such, two separate phenomena that are very different in their implications drive unemployment rate declines.
First, employment increases, decreasing the number of unemployed in the labor force leading to a lower unemployment rate.
Second, the labor force declines because fewer unemployed individuals are looking for jobs, and thus since there are now fewer “unemployed” individuals in the labor force, the unemployment rate decreases.
While recent declines in the unemployment rate were driven by discouraged workers leaving the labor force, this past month’s increases in employment (up 1) and the labor force (1) show that Hampton Roads experienced a real expansion for the month of March. It is important to keep in mind that this needs to continue for several months before the jobs recovery can be called sustainable.