Unemployment and Job Growth

August 26, 2014 12:15 pm

by Jon Richards · 15 comments

The Huffington Post picked up on remarks made at Saturday’s GOP rally at Burt’s Pumpkin Farm by Senate candidate David Perdue and Labor Secretary Mark Butler with respect to Georgia’s unemployment rate and the number of jobs that have been added in the Peach State.

“We’re working. I agree with whoever said…don’t worry about that unemployment number,” said Perdue. “Worry about the number of jobs created. The raw number. That’s what’s important.”

Perdue was agreeing with a comment by Georgia Commissioner of Labor Mark Butler, who had spoken prior to him at the event. Butler said the truly important metric of how the economy was doing was the number of private sector jobs created.

“The reason why we’ve had it [higher unemployment] is there’s been 45,000 less government jobs in the last three months,” said Butler. “The private sector has put up 42,000 jobs in the last three months. Which one do you think is more important? The private sector or government? The private sector.”

Last week, the Labor Department announced the unemployment rate in Georgia rose to 8.0% in July, up six tenths of a point from June.

Butler made a similar claim when he spoke to attendees at a rally in Rome earlier in the day. When he was asked later about where the government job losses came from, he said that they were largely due seasonal cutbacks in education, including things like school bus drivers and cafeteria workers. Now that school has started and classes have begun on college campuses, most all of those workers will be returning to their jobs.

In a hotly contested governor’s race, the incumbent will naturally talk about the number of new jobs created during his watch. The challenger will focus on the unemployment rate, which is the second highest in the country. If Labor Secretary Butler is correct, the unemployment rate will decline as we get closer to the November election.

{ 15 comments… read them below or add one }

Kyle Hayes August 26, 2014 at 3:41 pm

I’m concerned about this position regarding the Georgia labor market for a couple reasons. First, if you overlook the seasonal cutbacks (something I think we shouldn’t be too quick to do, but that is below) and you add back the 6/10 of a point, Georgia still has an unemployment rate a full percentage point higher than the national average (as reported by WSB). The private sector has been a part of growing the economy as we recover from the Great Recession, however it hasn’t provided enough job growth to help Georgia’s or the national labor market reach full employment. Economists consider the flat growth rate amongst public sector occupations to be one of the things holding the economy back from a fuller recovery. Brookings and Hamilton Project have some of those numbers from 2012 here (http://www.hamiltonproject.org/files/downloads_and_links/0803_jobs_government_employment.pdf) and a more recent description of flat public sector employment growth is here (http://www.governing.com/topics/mgmt/2013-state-local-government-employment-totals.html)

Brookings/Hamilton also note that there were 220,000 fewer teachers from 2009 to 20011 and say that this has a significant long-term impact on future wages of then-students:

“The savings from these cuts, in terms of teacher salaries and benefits, are $11.8 billion per year nationwide. While a significant figure, it is substantially smaller than the estimated present value in foregone earnings of $49.3 billion dollars for the children, whose education is affected by larger class sizes. To put a fine point on these findings, this translates into a per-student, per-year loss of nearly $1,000 in future earnings. In summary, the foregone benefits are more than four times larger than the current budget savings! ”

So in both the short and the long term, overlooking the role of public sector employment doesn’t seem like a smart way to judge our economy.

On the second point about seasonal educational workers, 6/10 of a full percentage point in unemployment is a pretty significant bunch of people to lose for 2 or 3 months out of the year. Compounding the problem is the decision by the legislature this year to bar the contract employees from receiving unemployment benefits during those three months. Assuming these are the same people (maybe they aren’t, but I can’t find out definitively), that means those people who are typically employed go three months out of the year without a wage that would largely be spent on groceries, housing, utilities and other necessities. As someone who would like to see Georgia have a strong labor market, particularly amongst low-income families, this seems like an oversight.

A smart discussion of our economy amongst both Senate candidates needs to take these factors into account.

Charlie August 26, 2014 at 4:40 pm

By all means, please, PLEASE make the lack of growth in public sector jobs a major campaign issue. The polls are a little tighter than R’s would like, and that would help most Georgia voters understand the difference between the R’s and the D’s again.

saltycracker August 26, 2014 at 5:29 pm

Before you are charged with hating teachers, it ain’t cheap to fund the non-teaching, retirees from their early 50’s, high paid administrators, mandates requiring more administration, school construction costs and such…..continuing it or justifying more revenue causes a strategy for cuts to the public services where it hurts.

Kyle Hayes August 26, 2014 at 7:28 pm

Hah you would have to talk to someone else about this actually becoming a campaign issue, but as an economic issue, this is one that keeps coming up. And from the perspective of the unemployed, I’d imagine a paycheck is a paycheck no matter who the employer is, and a step up from a UI benefit.

EAVCandor August 26, 2014 at 10:03 pm

Kyle, I think you’re spot-on here. But let’s not make Mark Butler do any hard math, lest his head might start to hurt. Wages are declining–not even flat, but going down–and Georgia is one of the states hit hardest. Mark can trumpet how his private sector jobs (GOOD!!) are growing as opposed to public sector jobs (VERY BAD!!!) but the fact is most private sector jobs we’re adding pay dick. Median income is down from where it was 8 years ago. That’s bad.

I fully expect the unemployment rates to go down because we’re adding lots of crappy jobs. But hey, isn’t it the American dream to work two lousy jobs because your education sucked and have zero job security because we’re in a RTW state and then you get to die earlier than those in more prosperous states because you have lousy healthcare?

Will Durant August 26, 2014 at 5:30 pm

If the bus drivers and cafeteria workers are not allowed to file for unemployment then how are they affecting the numbers?

Kyle Hayes August 26, 2014 at 7:31 pm

Not exactly sure how it impacts the numbers. The general unemployment rate you see reported comes from a survey conducted by the Bureau of Labor Statistics. There are also numbers of new unemployment claims that I think come from a different source. Theoretically though those people are unemployed and captured by the BLS unemployment survey.

Bill Dawers August 26, 2014 at 7:58 pm

The 7.8 percent unemployment rate in July has already been adjusted for seasonal factors. Butler’s explanation is nonsense. The not-seasonally-adjusted rate in July was 8.3 percent. Raw data here: http://www.dol.state.ga.us/pdf/pr/laborforce.pdf

Harry August 26, 2014 at 10:44 pm

Georgia has a problem…there’s no sense denying it.

Mark Butler August 27, 2014 at 3:05 pm

Nonsense would be putting too much faith in BLS’ preliminary numbers. Last June BLS had us report a rate of 8.5% and an increase to 8.8% in July. When they later readjusted those two months June was actually 8.4% and July was 8.3%. So they, in a nonsense kind of way, missed it by .5%. Still, in the last 12 months, Georgia is 6th in net job growth.

Kyle Hayes August 27, 2014 at 3:37 pm

So why aren’t public job sector numbers important, or at least important in the context of your quote where we lost more public sector jobs than we gained in private sector jobs? The disparity alone seems to warrant some importance. I don’t see any evidence that the Georgia economy is capable of recovering effectively without any consideration of the impact of flat public sector job growth, especially as it relates to long-term economic health.

Dave Bearse August 28, 2014 at 10:04 am

Yeah, what with former GE Chairman Jack Welch, alleging the Obama administration manipulates unemployment number for political gain ‘n all.

Maybe in another decade we’ll get back to Georgia unemployment being significantly less than the national average as was the case a decade ago when the GOP began running the state.

Mark Butler August 27, 2014 at 3:56 pm

The public sector job “loss” over the summer is just temporary. Private sector jobs are more important, its how public sector jobs are financed.

Harry August 27, 2014 at 8:17 pm

True, and it would be interesting to know how many fed jobs have been lost in Georgia over the last years. Why am I so cynical as to think the national Democrats have a political agenda in moving jobs from Georgia?

Harry August 28, 2014 at 1:54 pm

CBO Revises 2014 GDP Growth Projection Down to 1.5 Percent
http://townhall.com/tipsheet/guybenson/2014/08/28/stagnation-cbo-revises-2014-gdp-growth-projection-down-to-15-percent-n1884066
Maybe there’s more to this story than just Gov. Deal.