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What do the unemployment numbers mean for the economy? Depends, really

There are good jobs to be had in small counties, including at food-processing plants east of the mountains.
There are good jobs to be had in small counties, including at food-processing plants east of the mountains. Idaho Statesman

During a recent interview about a major manufacturing plant expansion project, the economic development executive of Adams County mentioned the challenge of finding workers given a historically low local unemployment rate.

So it was only natural to take a peek at the specific jobless rate to see what all the excitement was about.

The answer: 8.1 percent.

To be fair, that was for March 2019, and just in the few days since that interview the April 2019 rate was published by the Employment Security Department: 6 percent. County-level numbers are not seasonally adjusted, and some rummaging around the historic monthly data reveals a definite seasonal pattern to the workforce in Adams County, rising during the year to a summer peak, then trailing off as winter approaches. That’s to be expected in a rural county with much of the local economy tied to agriculture and food processing.

Still, 8.1 percent or 6 percent sounds … well, what does it sound like? Is that good, bad or indifferent?

It’s all in the context, which stirs a few random thoughts as we enter the thick of graduation season, and those flung out into the real world contemplate what side of the employed/jobless ledger they’re likely to fall:

In the context of what’s going on here in the Puget Sound region, 6 percent or 8 percent or any other unemployment rate is going to suffer by comparison. King County’s most recent reported unemployment rate was 2.8 percent, which way back in our musty economics courses was supposed to be impossible to achieve. There’s a term for that, as Investopedia reminds us: natural unemployment, “defined as the lowest rate of unemployment an economy will reach.”

Investopedia reinforces what we learned many years ago: ‘When an economy reaches the natural unemployment rate, the economy is at full employment. Most economists agree that the natural rate of unemployment is around 4 percent.”

But then, most economists don’t live here and aren’t trying to find a house they can afford within a day’s travel of the job they’ve got. Living in the middle of these supposed impossibilities (Snohomish was right at 3 percent) tends to distort perceptions of what other subregions of this area, and other areas of the state, are going through.

Areas like, just to cite an example, Tacoma and Pierce County, which in the most recent data came in at 5.5 percent. Is that good, bad or indifferent? It’s certainly not as dazzling as counties to the north. In fact it’s not as good as some other neighboring counties (Kitsap at 5 percent, Thurston at 5.2 percent) or even some elsewhere in Washington (Whatcom at 5.1 percent, Clark at 5.2 percent).

But again, maybe it’s the economy-distorting effects of tech in Seattle that makes 5.5 percent, at other times and in other places a perfectly respectable number (the annual average for 2010 was 10.4 percent), look like a sign of a plodding economy. Maybe it’s close enough to a true full employment rate that employers and employees can match up without the economy going berzerko (that’s a technical economics term).

And yet, even in economies with reported unemployment rates of 3 percent or less, there’s chronic unemployment and underemployment. How can that be? Let’s return for a moment to our friends at Investopedia for a look at one of the components of “natural” unemployment.

“Another part of natural unemployment is structural unemployment, which is where workers fail to find jobs and employers with available jobs fail to find workers,” the website explains. “This problem is created by some inherent long-term change in the economy. Two of the most common economic changes creating structural unemployment are technological advances and rapid relocation of available jobs.”

Even in the most woe-beset of traditional industries — media and retailing come to mind —there are jobs, good ones, too, to be had. The trick is to get the right balance of experience, expertise and mindset on the employee’s side, and nimbleness and strategic vision on the employer’s; both need to be thinking like entrepreneurs (which is why an introduction to the subject is increasingly important in high school and college curricula).

Those good jobs will pop up in the unlikeliest of places — like Adams County. The major manufacturing investment referenced in the opening paragraph of this column is a $300 million expansion of a plant in Othello making … french fries. Oh great, you think. Get a college degree to peel potatoes all day for minimum wage.

Actually, in the modern food-processing plant they’d just as soon your fingers never touch the raw materials or finished product; it’s about as automated a setting as there is in business. But the expansion is adding 180 jobs at a plant that already employs 450. The company behind it will need people to operate, maintain, repair and program that machinery; it will need experts in logistics and supply-chain management, in food safety and quality assurance.

While living in a small town won’t appeal to everyone, the idea of setting up shop in a town that is affordable will have an appeal to many, especially those who don’t lust for a Seattle-style, Seattle-priced life.

So what we’ve learned from this is … eat more fries. Well, yes, that, but more importantly not to draw too many conclusions about employment opportunities from local unemployment rates.

Even Seattle’s economy isn’t positioned to give newly minted grads whatever they want. But those that have been paying attention and have thought strategically about their education and their careers to follow are going to find some attractive options, no matter what the numbers say.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.
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