State needs more unemployment analysis, stats

Consider now the familiar unemployment data that are put out for each county each month. How the U.S. Department of Labor and the Indiana Department of Workforce Development get meaningful "estimates" for most Indiana counties is a mystery that Sherlock Holmes, Miss Marple and Lenny Briscoe are still trying to solve.

We get figures followed by pronouncements followed by policies without any real understanding of what the numbers tell us. The data are reported as the number of people living in each county who are either employed or unemployed. Add those two numbers together and you get the labor force of the county. The number unemployed divided by the labor force is the unemployment rate.

Got it? Good. It would take a fifth-grader five minutes or less to grasp the idea; a legislator who has served more than 30 years might get it in an hour.

From November 2007 to November 2008, Indiana saw the number employed drop 56,900 (1.8 percent). Why, in such an atmosphere, would the number of people in the labor force rise 31,000 (1.0 percent)? If jobs are disappearing, why are more people seeking work?

The answer may be hope—hope that there is a job out there for another family member to replace the lost income. Maybe that new job seeker was a stay-at-home mom who now looks for a job to help make ends meet. Perhaps the new worker was a student who cuts back on classes to find employment. The newly unemployed may be someone who moved back to Indiana in hope of finding work while living in the family home’s basement. We don’t know the answers for the state, yet we have numbers for each of our 92 counties.

First, a summary: All 92 counties saw increases in the number of unemployed people and in the unemployment rate. Going against the trend were six counties (DeKalb, Knox, Orange, Scott, Starke and Warren) with small gains in the number of employed people. At the same time, only 17 counties had decreases in the number of people in the labor force, as might be expected if folks had negative anticipations about getting jobs.

Elkhart County gets the "unfortunate leadership award" for 2008 with a 6-percent decline (5,760) in the number of people holding jobs. While on stage to receive that honor, Elkhart also receives the second place prize for the largest gain in the number of unemployed people (8,260). How did the number of unemployed increase more than the number losing jobs? The answer is a 2,500-person increase in the Elkhart County labor force.

Labor-force declines were estimated for 17 counties. The largest decline was in Vigo (491), followed by Howard (405), Clark (380) and Floyd (257).

Unemployment rates topped 10 percent in Brown, Grant, Harrison and Howard counties. Howard and Grant were distinguished by increases in their unemployment rates of more than 7 percentage points. Crawford, Elkhart, Harrison and Montgomery saw rates increase more than 5 percentage points.

Among the many problems with these numbers is that we do not know where the residents of each county find jobs when employment is cut. Do those laid off get jobs inside or outside their home counties? Are the new labor-force entrants going into new jobs or taking old jobs at lower wages?

How are the economic development professionals in each county supposed to do their jobs when they don’t get quality statistics like those provided to professional sports managers and coaches?
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Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.