The state unemployment numbers came out today, and the papers are all agog that that the unemployment rate is down to 7.0%.\u00a0 Now while that’s a lot better than the national rate of 9.8%, it’s also a little misleading.\u00a0 Almost all of the improvement came from a reduction in the labor force – people ceasing to look for work.\u00a0 While the number of people employed has stopped declining, the total labor force continues to fall:<\/p>\n

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The employment graph doesn’t start at 0 in order to better show the trends.\u00a0 The red line is the unemployment rate, and it’s to the scale ont he right-hand side.\u00a0 A couple of things stand out.\u00a0 First off, the number of employed seems to have stabilized.\u00a0 But it also seemed to have stabilized at least twice before: in mid-to-late ’08 and in Spring of this year.\u00a0 We then got two large drop-offs.\u00a0 There’s no guarantee that we’ve hit bottom yet, although we all hope to God we have.<\/p>\n

The other interesting thing is the unemployment rate from Spring of ’07 to Spring of ’08.\u00a0 It rose from about 3.5% to about 4.5%, even as the number of people employed was also rising, from about 2.56 million to almost 2.65 million.\u00a0 Note that the number of people looking was rising even faster.\u00a0 Which meant that at that point, even though we hadn’t felt the slowdown, new jobs weren’t being created fast enough to keep up with population growth.\u00a0 Now, the unemployment rate is dropping, even though it’s almost entirely due to people dropping out of the market.\u00a0 There’s considerably hidden labor inventory out there, and when it returns to the job hunt, the unemployment rate won’t be falling so quickly.<\/p>\n

Note that these are all seasonally-adjusted numbers, too, so they already taking to account seasonal retail, summer jobs, and teachers’ summer vacations.<\/p>\n

I’d also point out that here in Denver County, the seasonally-unadjusted were even worse, with the labor force dropping by over 3000, and the number of employed dropping by almost 2000.\u00a0 Whatever the job market looks like elsewhere, we’re not creating jobs locally.<\/p>\n

Here’s a graph I’ve updated since April:<\/p>\n

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It’s the state Unemployment Insurance Fund, and it’s a mess.\u00a0 While we talk about PERA, and taxing Peter to pay for Paul’s rent-seeking appendectomy, the fund is in serious trouble.\u00a0 It got almost no seasonal bump from the May solvency assessment, the numebr of claims paid has been skyrocketing (red), and the rolling 12-month payments by business (green) have been sloping downward because they’re not employing as many people.\u00a0 The net result is a cliff-diving account balance (blue).\u00a0 We were told that the account actuarily sound, but it should have been obvious at the time that we were facing not-normal circumstances.<\/p>\n

And it’s even worse than it looks.\u00a0 The feds kicked in an extra $127 million in exchange for SB 247 and more long-term commitments.\u00a0 Some of us pointed out at the time that borrowing short to go long wasn’t really matching obligations to receipts, but like the true addict it is, the state government saw the federal dollar signs and just couldn’t say no.\u00a0 Don’t hold your breath waiting for the Democrats in the legislature to admit they made a mistake.
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