September 26, 2012
TO: Interested media
FROM: Rebecca Rust, Chief Economist, Department of Economic Opportunity
RE: Background on Labor Force Estimates
CONTACT: DEO Communications, 850.617.5600, email@example.com
This document is provided as background information on the State of Florida’s labor market statistics.
Labor market estimates are designed to measure labor market activity (which is the interplay of jobseekers looking for work and employers looking for workers). The official definition of unemployed is those who are without a job but actively seeking work. If a person without a job stops looking for work, an employer does not have an opportunity to hire them. This person would not fit the definition of unemployed as they are not actively seeking work. Labor force statistics measure activity which is the relationship between the demand and supply of labor.
Florida’s economy is definitely improving. Florida has gained nearly 78,000 jobs since August 2011 and has had positive annual job growth for 25 consecutive months. Prior to this, the state had been losing jobs for three years. Florida’s August 2012 rate of 8.8 percent represents a decline of 1.7 percentage points since August 2011 and has declined over the year for 21 consecutive months.
Florida continues to lead all other states in the nation in the drop in its unemployment rate since December 2010, at 2.3 percentage points. Other indicators showing improvement in the state’s economy are:
- Online job ads – more than 264,000 openings, up 14.4 percent over the year
- Initial claims for reemployment assistance – down 35.0 percent from one year ago
- Housing starts – up over the year in July by 33.7 percent
- Median home prices – up 7.8 percent over the year
- Taxable sales – $26.5 billion in June, an increase of 5.6 percent over the year
- Tax revenue – up 6.2 percent compared to a year ago, marking the 29th straight month of annual increases
- Visitor counts – up 1.3 percent over the year
As the Department of Economic Opportunity announced on Friday, Florida’s unemployment rate remained steady at 8.8 percent in August 2012. There were 28,400 private sector jobs created, the largest over-the-month increase since April 2011.
The monthly household survey that collects this information does not have a large enough sample size to provide detailed data on the reasons people leave the labor force. These reasons can include retirement, disability, family obligations, going back to school, or discouragement over job prospects. However, none of these reasons can be connected to a specific decline in the labor force on a monthly basis. Florida’s labor force participation rate is lower than the national average due to the large number of retired people in the state who are not employed and are not currently looking for a job.
The number of “discouraged workers” (as defined by the U.S. Bureau of Labor Statistics) in the state has declined since December 2010 and over the last year. A recent article from the Wall Street Journal regarding a U.S. Labor Department report said “Most people who leave the labor force do so for reasons unrelated to the broader economy. As the U.S. population has aged, there’s been a gradual, long-term rise in the number of employed workers retiring and leaving the labor force.” Additionally, a USA Today article that focused on a recent report from Mark Zandi, Chief Economist of Moody’s Analytics, echoed the U.S. Labor Department report saying “Many more employed than unemployed Americans dropped out of the labor force last month, likely indicating that most were retirees rather than discouraged workers.”
When judging the health of the state’s economy, one should not focus on short-term variations in a single metric such as “discouraged workers.” Many other indicators need to be considered when making this determination. Since December 2010, the number of people not looking for a job due to discouragement is down. Improvements are being seen across many other aspects of the state’s economy, as enumerated above, and we believe that Florida is heading in the right direction.Tweet