Sen. Jack Hill’s Take on GA’s Unemployment Numbers

The following is a guest post from Sen. Jack Hill (R-4), Chairman of the Senate Appropriations Committee.  It is re-printed in its entirety with permission from Sen. Hill.

A NON-ECONOMIST’S LOOK AT UNEMPLOYMENT NUMBERS

We don’t pay too much attention to the unemployment rate normally, maybe being vaguely aware of the trend down or up, but not much else.  The injection of the rate as a signal of failure of the current administration caused me to want to see what economists were saying about Georgia’s economy and how they view unemployment statistics.

Turns out, they don’t put much stock in them either because they use a number of measurements both to evaluate where the economy is and to make judgments about where it is going.

I do remember something an Office of Planning and Budget official in the Miller administration told me one time when I mentioned to her a mysterious unemployment number that didn’t make sense.  She said “we don’t put much stock in unemployment numbers when looking for a direction in the economy on which to base Revenue projections.”  She said “Frankly, we find Food stamp applications a better guide of how the economy is going than unemployment rate.”

Remembering that conversation, I decided if I was going to evaluate Georgia’s economic situation in light of the unemployment numbers, maybe that was a good place to start.

In Georgia, the Food Stamp program is called SNAP and I asked for a review of numbers of recipients month by month for the past six years.  Some smoothing out is required because of the backlog of applications earlier this year, but the graph for 2008-2014 shows a rise in recipients in 2009-2012 peaking at 1,972,221 recipients in November of 2012 and a slow decline since then.  A 12 month average ending in July 2014 shows an average of 1.819 million recipients per month, which is a 7.1% average decrease from the preceding 12 months average.  So there is a marked decline in food stamp recipients since the midst of the recession.

ECONOMISTS DON’T AGREE WITH UNEMPLOYMENT INDEX INDICATOR

Secondly, I wanted to understand what economists who track economic activity regularly were saying about the unemployment rate.  Dr. Rajeev Dhawan, a really smart guy with a great sense of humor, is director of the Georgia State Economic Forecasting Center.  He presents a quarterly report, and although I missed it in person this year, the Atlanta Constitution titled the article on his report “Ga. Growth is Expected to Continue.” Dr. Dhawan predicts 74,100 more jobs will be created in Georgia this year with one fifth of them considered “premium” well-paying jobs and expects the state to add 83,600 jobs in 2015.  What was interesting was the quote in the AJC from Dr. Dhawan on unemployment rates.  According to the AJC, he states that “unemployment is the most misleading statistic to measure the health of the economy,” He stated he pays more attention to measurements like income, job creation and state tax collections, according to the same news story.

Other economists don’t see Georgia’s economic picture tied to the unemployment rate as well.  Wells Fargo’s Economics Group puts out a state by state analysis of economic activity and just published one entitled Georgia Economic Outlook: September 2014.  The opening paragraph begins: ”Georgia’s economy essentially kept pace with the nation during 2013, with real GDP rising 1.8% during the year.”  “EMPLOYMENT GROWTH WAS ALSO LARGELY IN LINE WITH THE NATION AND THAT TREND APPEARS TO HAVE CONTINUED INTO 2014.”  The report outlines the resurgence of the carpet industry with expansions in north Georgia, the continued growth of aerospace jobs, demand for industrial space remaining strong and a section entitled ”Factories are humming again”.

The report notes the continued growth of the film industry in the state, recovery of housing, and lists growth of nonfarm employment at 2.1% over the past year.  It closes with this quote:  “The state’s jobless rate is now one of the highest in the nation, a fact that seemingly flies in the face of common sense.  WE SUSPECT THAT THE HIGH JOBLESS RATE REFLECTS THE RETURN OF JOB SEEKERS TO THE WORKFORCE IN ANTICIPATION OF BETTER EMPLOYMENT OPPORTUNITIES.

POPULATION GROWTH ABOVE NATIONAL AVERAGE—PEOPLE HUNTING JOBS?

Since 2010, Georgia is growing at a rate outpacing the country, some 3.1% or about 100,000 per year.  (2010–9.687 million versus 2013–9.992 million).  Atlanta’s Metro area was just named the 7th fastest growing metro area, growing by some 52,700 people in just one year, from April, 2013 to April 2014.

I would submit that Georgia is still seen as the place to go to get a job and the influx of population is holding up unemployment numbers even as more and more jobs are being created.  In other words, the denominator keeps increasing.

Lastly, another Labor Department statistic that is pretty important is the U-6 or Underemployment rate.  Looking back over time, from a mid-recession high of about 17.9%, the rate has steadily declined to a level of under 14% in mid-2013, the last date I could find.  Seems to support the theories above.

MY CONCLUSION: GEORGIA HAS MADE SUBSTANTIAL PROGRESS IN FOUR YEARS

In January of 2011, when  Gov. Deal took office, the state unemployment rate was 10.10%, DOR revenue was less than $15 billion and the HOPE  program was a couple of years away from eating up hundreds of millions of reserves and being broke.

Today, even if the unemployment rate really is 7.9%, and that is debatable as a measurement of economic health, that improvement is over 2 points lower than 10.10% level in 2011 – a 27.8% decline in under four years.  And through it all, Georgia has maintained its AAA bond rating, until recently, one of only eight states to do so.

In Tattnall County, I hear people say “It ain’t bragging if it’s true.”  On almost any measurement you can make, the state has made great progress under Gov. Deal…from where we were…. and the fact the opposition is hanging on a flimsy unreliable statistic like the unemployment rate shows they probably know it too.

17 comments

  1. Derp. The economy is getting better in the entire country. We are still last by the only measurement that is consistently applied to every state. I am sure that food stamp applications in the rest of the states are going down as well.

    Even if there’s some statistical noise, it isn’t like we’d be #1. At best maybe we’d be like #46 due to margin of error.

    I don’t understand why this is so hard for people to grasp – Georgia’s economy is doing better than it was, so is the rest of the country. How is our employment doing compared to EVERY OTHER STATE? It is the worst.

    • blakeage80 says:

      If unemployment, as demonstrated above, is an unreliable indicator of an economy’s health, then how is it a reliable comparison tool?

      • I don’t respond to people who only think the unemployment rate is unreliable when it hurts a Republican governor, two years after mounting a massive campaign for President based on the same rate.

        • blakeage80 says:

          Why don’t you at least try and tell us why the unemployment rate is reliable instead of hollering what anyone already knows about unemployment numbers in Georgia. Sen. Hill seems to be respectfully making the case that unemployment is an economic gauge for the lazy to use how they wish. It’s fair game and effective, but really its just easy news. He dug around and found some facts. I’ve heard none from you except the widely known fact that our unemployment numbers are higher than other states. In most contexts, comments sections on blogs are for responses to the article or fellow posters, not for an individual to write their own treatise.

          • The national average decline in SNAP benefit usage is 2.4% from July 2013 to July 2014. Georgia’s is 2.6%. So we are in line with the national average. And yet our unemployment rate is still the highest in the country.

            Compared to the FY 2011 baseline for SNAP recipients (this seems like a fair date to pick for Deal).
            Total US Population: +3.9%
            Georgia: +5.7%

            So you don’t like unemployment rates, fine, now explain to me why Georgia’s SNAP usage is 5.7% higher than before Deal took office and that outpaces the US average by nearly 2%?

          • Dave Bearse says:

            Here are some alternate easily understood numbers demonstrating Georgia is falling behind:

            2002 median income: US $43,052, GA $43, 316
            2008 median income: US $52,029, GA $50,311
            couldn’t find 2010 numbers
            2013 median income: US $51,915, GA $47,811

  2. WeymanCWannamakerJr says:

    Apologists abound for this guy and it doesn’t take much reasoning to figure out why. If nothing else could be said of him and more than probably any Governor in recent memory, he is kind to his friends. Though typical of a politician this kindness is often at the taxpayer’s expense. I shudder to think how much this largesse will cost us with 4 more years knowing he will never face another election again.

    With the same criteria being applied to all the states and DC the unemployment rate in Georgia is dead last. I sincerely wish that wasn’t the case but it is what it is.

  3. rightofcenter says:

    And on this site haters of this guy abound. Perhaps the “apologists” appreciate this governor’s willingness to discuss and consider issues, his willingness to take tough but necessary stands, his well reasoned policy positions, etc. Although if it makes you feel better about yourself, you and your fellow haters should just continue to think that it is because we are all a bunch of greedy, selfserving crooks.

    • WeymanCWannamakerJr says:

      “… we are all a bunch of greedy, selfserving crooks.” Is that a royal “we” or I am addressing Mr. Riley? Mr. Robinson? We are not amused at being called a “hater” for expressing an opinion that 14 paragraphs including ALL CAPS fails at trying to explain away that, in comparison to other states, Georgia’s unemployment rate is at least very near the bottom. How does one or, if you prefer, We label this other than the language of an apologist.

      We are sincere in wishing Georgia had the lowest unemployment rate regardless of who may have been Governor. We have a heavy financial stake in Georgia’s well being along with many others. We are not blind to this Governor’s unwillingness to discuss certain issues. Consult Dr. Barge on that one. We have noticed his tough stands like supporting TSPLOST tenderized within the course of one day. We are also not blind to the fact that this Governor’s policies have by and large been very kind to his friends and hell on his enemies. While this is certainly not an exception, his exceptionally high-handedness in doing so leaves us in fear of a future where this can be done without any political ramifications.

      • rightofcenter says:

        The term hater wasn’t used for this particular response but for the collective posts over the last 6 months. As for Sen. Hill’s post, I thought it was quite good. Shocked tehat you don’t agree. Shocked.

        • WeymanCWannamakerJr says:

          I’m not shocked that your pure partisan blinders with pink tinted lenses have allowed you to be convinced by Sen. Hill’s theorems that 51st out of 51 does not equal last. If calling Bravo Sierra on corruption and political grandstanding has convinced you that I am a “hater”, then so be it. For the most part I am actually right of center and you appear to be to the right of Attila the Hun. If you can’t see the harm done to the Republican Party in Georgia with these 2 Democrat-turned-Republican Governors then your lenses may as well be opaque.

  4. A Dapper Gentleman says:

    Change the title to: Senator Hill respons to the New York Times.

    At least he’s modest. We should all congradulate Deal for growing the economy but doing so in a way not to come out ahead of other states.

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