Labor Force Prospects Improve in July (Un)Employment Situation

Earlier today the Oregon Employment Department released labor force data for July. This data showed that the state added 300 seasonally adjusted nonfarm jobs over the month. Oregon's unemployment rate reached 9.5 percent, essentially unchanged from the previous month, but down substantially from a high of 11.6 percent in June 2009.

Along with the unemployment rate, the Employment Department provides labor force data each month, which includes counts of the number of employed and unemployed Oregonians. Add up the two numbers to get the civilian labor force. Some associated measures of the labor force are usually not found on the Department's website www.QualityInfo.org, including “alternative measures of labor underutilization” and “unemployment by reason”. The former of the two quoted measures includes the “U-6”, a broader measure of labor market difficulties that includes the unemployed, along with those who are marginally attached to the labor force, and those working part time for economic reasons.

Employment Department Economist David Cooke shares some interesting trends in the July data. First, far fewer Oregonians are being laid off from their jobs compared with the past two calendar years. The Employment Department tracks data that identifies unemployed Oregonians by reason: new entrants into the labor force; “job leavers” who separate from their jobs voluntarily; and “job losers”, those who involuntarily lost their jobs. The number of job losers held steady at above 130,000 for all of 2009 and 2010, then dropped fast to around 75,000 in recent months. This is a steep decline, but still well above the number of job losers seen in 2006 and 2007, which was near 40,000.

One reason that Oregon’s unemployment rate has not declined faster is new entrants into the labor force. New entrants are people who formerly weren’t employed and they also weren’t unemployed. In other words, they weren’t in the labor force. But now they are actively seeking work, but unable to find a job. New entrants numbered close to 50,000 from early 2009 through early 2011. Recently, that number spiked upward to about 70,000 by July. These new entrants could be college graduates, new arrivals to Oregon, or previously discouraged workers who feel their job prospects have improved enough to make resuming their job search worthwhile.

The third group of Oregonians who are seeing a rapid and profound shift in their job prospects are those working part-time for economic reasons. This group numbered close to 4 percent or 5 percent of the labor force from 2002 through 2007. Then, the economic downturn forced many to work part time, even though they wanted full-time work. The number rose to about 8 percent of the labor force for nearly all of 2009 and 2010. According to the Current Population Survey, these involuntary part-timers have now shrunk to less than 6 percent of Oregon’s labor force.

One caveat: all three of the labor force measures discussed here are trended figures. Therefore, they lack the precision of other labor force figures, such as estimates of the total number of people unemployed. These measures are based on a relatively small survey sample of nearly 1,000 households in Oregon, and they are subject to revision at a later time.

Although Oregon's unemployment rate has only declined by about 2 percentage points over the past 48 months, other measures within the labor force numbers suggest that we're seeing substantial underlying improvement. Counts of monthly job losers and involuntary part-timers have declined, and new entrants to the labor force have increased sharply, likely indicating improving confidence in job prospects.

For general labor force statistics in your area, visit the local area unemployment page at QualityInfo!