The Times West Virginian

Business

June 29, 2014

State unemployment rises, but more actively seeking work

FAIRMONT — Although the latest monthly statistics show a higher unemployment rate for the state, the good news is that more people are actively looking for work.

The Labor Market Information unit of WorkForce West Virginia’s Research, Information and Analysis Division recently published the May 2014 labor force estimates for the state.

“WorkForce West Virginia collects, analyzes and publishes an array of information about the state’s labor market,” said Joe Jarvis, data analyst for WorkForce West Virginia.

“This information provides a snapshot of West Virginia’s economy, job market, businesses and its workforce. Data on jobs and workers, including labor force, employment and unemployment, industrial growth, occupational trends and wage rates, are increasingly important to remaining competitive in the global marketplace.”

The state’s seasonally adjusted unemployment rate went up 0.3 percent, going from 6 percent in April to 6.3 percent in May. The not seasonally adjusted unemployment rate increased 0.4 percent, moving from 6.1 to 6.5 percent.

WorkForce West Virginia’s latest report shows that the state experienced an increase of 2,600 unemployed residents, with total unemployment going from 48,500 in April to 51,100 in May, which is seasonally adjusted.

“An increasing unemployment rate is not uncommon during the month of May, as many college and university students re-enter the workforce seeking summer employment, thus expanding the civilian labor force and the number of those actively seeking employment,” Jarvis said.

Dr. Amy Godfrey, assistant professor of economics at Fairmont State University, explained that the rise in the unemployment rate as well as the number of unemployed residents from April to May may seem like a negative sign for West Virginia, but it’s not as bad as one might think.

“This increase is due to some individuals losing their jobs, but mainly due to an increase in the labor force,” she said. “From April to May, more individuals in the state were employed or actively looking for work (i.e. unemployed), leaving less discouraged workers in the economy. Less discouraged workers means more good job prospects in the economy (i.e. growing economy).”

John Deskins, director of the West Virginia University College of Business and Economics’ Bureau of Business and Economic Research

(BBER), warned that people shouldn’t get too caught up in one month’s worth of data, because numbers can fluctuate widely from month to month, but should look at the longer trends instead.

He echoed that the recent rise in unemployment wasn’t due to people being laid off.

“This isn’t bad news that the unemployment rate rose,” Deskins said. “The economy added jobs over the month.”

He reported that private-sector employment has grown by 1.2 percent over the past year.

The recent increase in unemployment was due to the fact that a lot of people entered into the labor force and started looking for work, which is a good sign, he said. Those individuals are counted as unemployed, which drives the unemployment rate up.

In 2008 and 2009, however, many individuals were dropping out of the labor force. They had lost jobs and were having such a hard time in their search for work that they gave up, which means they weren’t counted as unemployed anymore and the rate declined as a result, Deskins said.

“The reason more people are looking for work is probably because of optimism,” he said of the current improvement in the economy.

Deskins said the labor force numbers in most of the sectors have grown.

From April to May, total nonfarm payroll employment rose 11,900, representing an increase of 500 jobs in the goods-producing sector and 11,400 jobs in the service-providing sector. Total nonfarm payroll employment went up 23,900 compared to May of last year, showing a gain of 25,000 jobs in the service-providing sector and a loss 1,100 jobs in the goods-producing sector.

Godfrey said the government, leisure and mining sectors saw a large amount of growth in employment from April to May.

The increase of 10,300 jobs in government relates to the workers that helped in the primary election, so that sector will see a decrease in the next month. The growth in the leisure sector is associated with seasonal changes, as more tourists are traveling around West Virginia in the warmer months, she said.

The addition of 900 jobs in the mining and logging sector equates to the growth in the state’s natural gas industry, which is also positively impacting the gross domestic product, Godfrey said.

The construction industry has seen the biggest drop in employment, decreasing by 2,200 jobs since May of last year, she said.

From May 2013 to May 2014, the state's not seasonally adjusted unemployment rate grew 0.2 percent, from 6.3 to 6.5 percent. The total unemployment also saw a rise of 2,500 over the year, as it jumped from 50,200 to 52,700.

On the other hand, the seasonally adjusted unemployment statistics showed the opposite, decreasing over the time span of a year. Total unemployment dropped 600 from May of last year, when the number was 51,700. The unemployment rate also experienced a 0.2 percent drop compared to May 2013, when it was 6.5 percent.

“The seasonally adjusted unemployment rate is created through a statistical technique that attempts to measure and remove the influences of predictable seasonal patterns,” Jarvis said. “This includes school schedules. Therefore, it is not unexpected for the seasonally adjusted rate to decline in May, while the not seasonally adjusted rate increases.”

He reported that for each of the first five months of 2014, the unemployment rates were lower than they were that same month of the prior year. Some of those figures represent the lowest rates seen since 2008.

Godfrey pointed out that because the state’s economy continues to grow, which is evident in the considerable increase in the GDP, the unemployment rate has stayed lower than the national average.

“As the West Virginia economy continues to grow, state employment should trend upward,” she said. “From 2012 to 2013, West Virginia’s GDP growth was the third highest in the country. This growth will lead to more jobs as well as more individuals feeling positive about the economy and thus joining the labor force. Note that unemployment rates in the state may drift upwards during this time, but that will be due to individuals joining or rejoining the labor force who had been discouraged.”

Deskins believes the jump in unemployment will only be temporary, and he expects it to decline slowly but steadily for a couple more years.

Email Jessica Borders at jborders@timeswv.com or follow her on Twitter @JBordersTWV.

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