Thursday, November 17, 2016

Jobs Lost for 17 Straight Months

Jobs creation is one of the essential measurements of the strength of an economy. When no new jobs are being created, many analysts focus on the unemployment rate as a way to find out how weak the economy actually is. This, however, is an inexact measure for a state; it works well for countries where the in- and outflow of labor across the border is legally, culturally and economically limited. A state does not have those limitations on the flow of people across its borders. Therefore, when there is a decline in a state's economy, the unemployment rate often remains low simply because of outbound workforce migration. 

Wyoming is a good example. Our unemployment rate still is relatively low, despite the major decline in economic activity in our state: as of September, the rate was 5.3 percent. This is way too low for an economy where GDP is in decline and major industries have recently been cutting jobs, and done so brutally.

To get a better picture of the jobs situation in our state, we should therefore simply go to employment statistics. Provided by the Bureau of Labor Statistics (BLS), it is one of the most informative time series we can obtain to understand how the Wyoming economy is doing.

The latest BLS numbers, from September, do not paint a positive picture of our state's economy. 

To begin with, total non-farm employment stood at 285,900. Compared to September 2015, that is a decline of 3.2 percent . It also happens to be the 17th month in a row when total employment has fallen year over year. 

The source of the employment decline is the private sector. It, too, has seen 17 straight months of year-over-year jobs cuts. Here, though, we find more details about the actual employment trend in our state. For the 17-month period of declining employment, the average per month is -3.5 percent. For seven of those 17 months, the job loss rate has exceeded four percent. September 2016 is one if those months: private sector employment is down four percent over the same month last year. 

In actual numbers, the job losses are as follows:

Figure 1
Source: Bureau of Labor Statistics 

As Figure 1 makes clear, there is no other trend in private-sector employment in our state than downward. 

There is no doubt that this negative trend has its origin in mining. Wyoming has been losing coal-mining jobs for longer than the private sector as a whole:

Figure 2
SourceBureau of Labor Statistics 

However, the latest string of coal job losses has merged with a decline in jobs in both oil-and-gas extraction and in mining support services (where almost half of all jobs have vanished in two years). But the job losses in mining - which now amount to one third over two years - are also spreading to other private-sector industries. For example, in Trade, Transportation and Utilities the job-loss trend is actually accelerating:

Figure 3 - Year-to-year job losses, Trade, Transportation, Utilities; 1000s (black line) and percent:
SourceBureau of Labor Statistics 

Financial Services is yet another industry with a growing series of job losses, 17 months to be exact. With an average reduction of almost 400 jobs per month, the industry is clearly the victim of negative multiplier effects from minerals.

Almost no industries show indisputable upward trends; health care is one of them. Overall, though, the Wyoming economy is now verging on a chronic job-loss problem. There will come a point, probably within the next three months, when the decline in employment flattens out. However, that does not mean there is an improvement awaiting; for that to happen, Wyoming would need a fundamental new-start as a state. It is much more likely that our state's economy will reach a bottom of the current downslope and then continue to operate at that level for the foreseeable future (much like Greece...). 

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