Chamber Spins Local Unemployment Figures

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Is the recovery a dream? We have to go deeper...
  • Is the recovery a dream? We have to go deeper...

According to a post on the Nashville Chamber of Commerce's blog, the unemployment rate for the Middle Tennessee region is yet more proof that the economy is on the road to recovery.

"At the local level, recently released data on the unemployment picture in the Nashville region showcases continued strong improvement in our local economy," the post reads. "The March unemployment rate for the Nashville MSA was at 6.7 percent, down from 7.1 in February and 8.1 percent in March 2012. Davidson County tied for the second-lowest rate in the Nashville MSA, at 6.6 percent."

The chamber goes on to point out that "the current number of unemployed people in the Nashville area, 55,400, represents the lowest level since December 2008," and is indicative of a "pattern of resurgent economic growth [that] aligns with the stronger performance that the Southern U.S. continues to experience relative to the nation as a whole."

Yet even a cursory understanding of the specifics regarding the nation's ongoing "recovery" and unemployment statistics in general yield a more nuanced and decidedly less-than-rosy outlook for Nashville and beyond.

While the chamber is mostly correct in pointing out that the region is bouncing back in a big way from the recession, a few caveats are in order if their claims are to fully match reality.

Current non-farm employment (759,000) is still less than what it was in March 2008 (762,000), albeit not by much. Since the recession, the regional economy has slowly but surely made significant gains to recoup the roughly 34,000 local non-farm jobs purged by the economic meltdown. The numbers have improved, to be sure, but we're still not back to where we once belonged.

Further, to suggest that the sinking unemployment rate is evidence of "continued strong improvement" is woefully misleading given the fact that, nationally, the current unemployment rate (a 3-year low of 8.1 percent) is largely attributable to the fact that more and more people have simply given up looking for work.

From The Christian Science Monitor:

The unemployment rate dropped to 8.1 percent last month from 8.2 percent in March. It has fallen a full percentage point since August to a three-year low. But last month's decline was not due to job growth. The government only counts people as unemployed if they are actively looking for work.

In April, the percentage of adults working or looking for work fell to the lowest level in more than 30 years. Many have become discouraged about their prospects. More than 5 million Americans have been unemployed for six months or longer, an astonishingly high number almost three years into a recovery.

The unemployment rate looks like it has declined for all the right reasons because we still use an unemployment metric from the Reagan era that excludes those workers so disparaged that they give up looking for work altogether.

Therefore, those 55,400 unemployed would have their ranks swell if the chamber applied a more inclusive definition of unemployment. Currently, the U.S. Bureau of Labor and Statistics uses the standard International Labor Organization "U3" definition, which doesn't include those discouraged workers. As a result, you can expect any given official numerical statement on unemployment to downplay the real rate by at least a handful of percentage points.

And as far as the jobs actually being created, it's safe to say that the vast majority of them are not full-time white collar jobs.

From The Nation:

The picture is as bleak in the United States as it is around the globe generally. Part-time employment grew from just under 10 percent in 2007 to just over that figure in 2010. But even worse is the fact that the percentage of the workers in those jobs who would rather be working full-time doubled, from around 7 percent in 2007 to 15 percent in 2010. That’s a lot of people who aren’t working as many hours as they need to. The recovery period has also steadily created more temporary jobs than stable, lasting ones.

...

Beyond giving workers little stability in their lives, temporary jobs pay poorly compared to their full-time counterparts. The ILO’s analysis of nine countries showed that temporary workers are paid about 40 percent less than permanent workers, and that holds true even when controlling for individual characteristics. It may be unsurprising, then, that the report finds that around the world, “the majority of new jobs are remunerated at a rate below average wages.” Are workers who are lucky enough to be re-employed even making what they need to get by?

The United States in particular has intimate knowledge of this phenomenon: we lead developed nations in the share of low-wage workers. Analysis by the CEPR shows that while more than 10 percent of the workforce in most rich OECD countries is in low-wage jobs — defined as making less than two-thirds of the national median hourly wage — about one-fourth of US workers find themselves in that category. That percentage has been on the rise for at least three decades, and the trend is on track to worsen given the kinds of jobs the economy is producing.

While none of the data cited by the chamber mentions what kinds of employment opportunities are being created, it's a safe bet that at least some of the national trends regarding the creation of low-skilled, high-productivity jobs are at play in and around Music City.

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