Is Ohio's, Nation's Unemployment Rate Higher Than Officials Say?
Labor Underutilization Rate Adds to Official Jobless Rates, Business Watcher Says
Columbus, Ohio: Balmy summer breezes have been displaced by the onset of winter weather every bit as chilly and foreboding as recent reports that show more Ohio workers are loosing their jobs, facing home foreclosures and wondering if the state's unemployment benefit fund can withstand the onslaught of thousands more who need a bridge over the torrent of troubled waters that may wash away their futures. Ad to this vortex of bad news the slippage of retirement savings and you've got the makings of an oncoming ill wind that seems unstoppable.
National figures from the Bureau of Labor Statistics (BLS) show the number of newly laid-off individuals seeking unemployment benefits has jumped to a seven-year high. Jobless claims rose 32,000 last week to a seasonally adjusted 516,000, the highest since fall of 2001 and the second-highest since 1992. A four-week moving average of claims, which hasn't been seen in 17 years, increased by 13,250 to 491,000. Jobless numbers above 400,000 point to a recession. The number of individuals who continue to seek unemployment benefits is about 3.9 million, the highest number since early 1983. The rise in the unemployment rate, not seen in 14 years, hit 6.5 percent in October, as the number of unemployed grew to 10.1 million. While mass layoffs were announced by Morgan Stanley, General Motors Corp, Ford Motor Co. andFidelity Investments, Ohio is girding for thousands of layoffs from DHL , Whirlpool and payday lenders, who said they would trim their workforce if voters upheld a law that caps the interests rates they can charge for short-term loans. By a 2-1 margin, Ohioans voted for reduced interest rate charges.
The sad statistics contained in the mass layoffs report from BLS Thursday show that in the third quarter 2008, 1,330 extended mass layoff events (involving more than 50 employees) resulted in 218,158 separations. Among the reasons for the layoffs were separations due to both "slack work and bankruptcies nearly doubled over the year." Layoffs due to business-ownership changes more than doubled. The construction industry recorded the highest third quarter activity in program history.
If the remedy to the economic meltdown is housing, a report from RealtyTrac Thursday shows Ohio's contribution to the root problem. In Ohio, 12,109 properties were in some stage of foreclosure in October, one for every 417, according to Columbus Business First. The Ohio figure is higher than the nationwide foreclosure rate of one filing for every 452 houses in the month. Spreading residential foreclosures is not new to Ohio. It has ranked high among states in this ignominious category for years. TheRealtyTrack report said that even though Ohio’s foreclosure rate was the 10th-highest, it occupied sixth place in the number of filings last month – 4,546 default notices, 3,240 foreclosure sale notices and 4,323 bank-owned properties. October marked the 34th consecutive month foreclosures have increased from a year earlier.
Labor Underutilization Rate Underutilized in Unemployment Rate Calculations
Ohio's unemployment rate (7.2 % in September) is more than a full percentage point above the national average of 6.1 percent. But if the argument made by Daniel Gross is true, recasting Ohio's rate considerably higher would reflect the real numbers of all segments of the unemployed. Gross argues in Slate Magazine article that "maybe the employment data are much worse than they seem" because the official government "unemployment rate doesn't account for people who have given up looking for jobs, or who have taken themselves out of the work force." Gross fleshes out the "categories of labor underutilization" the BLS adopted in 1994, when it reexamined how unemployment rates were calculated.
Daniel Gross from Slate: "There are many different varieties of labor underutilization. There are marginally attached workers: 'persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.' There are discouraged workers, a subset of the marginally attached crowd, who have 'given a job-market related reason for not looking currently for a job.' There are people who work part-time because they can't find—or their employer can't provide—full-time work. There are people who have left the work force entirely. Neither the unemployment rate nor the payroll jobs figure captures the plight of many of these folks."
Gross writes that the data on people not in the work force show the number of people not looking for work because they're discouraged about finding jobs has risen from 276,000 in September 2007 to 467,000 in September 2008—up 70 percent. He observes that the percentage of people unemployed for more than 15 weeks stood at 2.3 percent in September 2008, up from 1.6 percent in September 2007, a rise of nearly 45 percent. But he says the most troublesome is the U6, a statistic he labels the "summa of job angst" or the "shorthand tally for the aggregate of job-related frustration. To compile the U6, Gross says the BLS takes the number of unemployed, plus all marginally attached workers, plus all of those employed part-time for economic reasons, and then calculates that total as a percentage of the sum of the entire civilian labor force plus marginally attached workers.The U6 in September, he notes, rose to 11 percent, its highest level since the data series started in 1994 and significantly higher than it was in the last recession, in 2001.
The number of workers unemployed in Ohio in September was 434,000, down from 445,000 in August, according to figures from state sources. The number of unemployed has increased by 93,000 in the past 12 months from 341,000. So if the U6 in September for the nation was 11 percent, and the "underutilization" number for the same month was 4.9, could Ohio actually have an unemployment rate of 12 percent or more? And the number could be even hirer, if people who are self employed but don't have enough business to keep them working full time are included.
About the author
John Michael Spinelli is a former Ohio Statehouse government and political reporter and business columnist. He now serves as the OhioNews Bureau Chief for ePluribus Media Journal. Find ONB archives here.
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