Come on Wayne, you can do better than that!
I wrote a piece a few weeks ago on the local economy and housing data. I am still planning to get back to an analysis of the local housing market, from both the demand side as well as the supply side. Obviously, the local employment situation is important to this evaluation, so I was very interested to see today’s Colorado unemployment data released. I was not expecting a seasoned business writer to rewrite the state’s press release (here) and publish it as good news without any critical analysis. (I’ll give Professor Crowley the benefit of the doubt and assume that he did not have any time to review the data before talking to the reporter.)
With that off my chest, here’s my take on the data. First the unemployment rate is just that, a rate, a ratio, a fraction. As we all learned in grade school, a fraction has both a numerator (the number on top) and a denominator (the number on the bottom). A fraction gets smaller when the number on the top gets smaller; or when the number on the bottom gets bigger. If both numbers change in the same direction, one must look at and compare the amount of change in the two. With the unemployment rate (fraction), the number on the top is the number of persons looking for work who haven’t found a job. The number on the bottom is the number in the civilian labor force, those either employed or looking for work.
With that in mind, let’s compare today’s numbers with those of March 2010, since that is the reference point in Mr. Heilman’s story. (Data found here .) In March 2010, there were 32,140 people looking for work in the Colorado Springs MSA. In March 2011 there were 30,985. The net change is 1,155 fewer people looking for work. Maybe this is good news? Maybe these 1,155 people found jobs?
Maybe not. When one looks at the other number in the fraction, the good news turns sour. In March 2010 there were 311,826 people in the civilian labor force. In March 2011 there were only 306,432, a decrease of almost 5,400 people. The unemployment rate decreased because the number of people looking for work decreased faster that the number of people in the labor force.
The news gets worse when one looks at the actual number of people who have jobs. In March 2010 there were 279,686 people employed in the Colorado Springs MSA. In March 2011 there were only 275,447. A decrease of 4,239.
Good news Wayne? Hardly.