ECONOMIC TIME MACHINE

The numbers behind Gov. Scott’s job-stats flap

 

Florida’s growing population is an asterisk in the state’s declining unemployment rate. Gov. Scott finds himself in a fight over statistics.

dhanks@MiamiHerald.com

Gov. Rick Scott got in a spat with a reporter Tuesday over some employment statistics.

With Scott touting job growth, a Bloomberg reporter noted how state economists have calculated Florida’s 8.8 unemployment rate would be 9.8 percent if not for the shrinking size of the state’s population that actually participates in the labor force.

Known as the “participation rate,” the statistic measures the portion of the population that’s in the labor force — that is, either working or looking for work. In July the participation rate stood at 60 percent in Florida, a 26-year-low and down from a recent high of 64.3 percent in 2007.

The 40 percent not “participating” in the workforce -- or roughly six million of the state’s 15.4 million residents — include retirees, students, and those who don’t hold a job and have stopped looking.

That third category gets the most attention, since a rise in so-called “discouraged workers” can artificially lower the unemployment rate even if hiring is shrinking. That’s because the unemployment rate is calculated by dividing the number of people without jobs by the number of people in the labor force. If people leave the labor force faster than the unemployed get hired, the unemployment rate will go down.

What’s easy to overlook in the Scott flap is the fact that Florida’s labor force has actually been growing almost non-stop for the last three years before going up and down in 2012. It’s been back on the rise for most of this summer.

Employment, as measured by federal surveys, also has been on the rise for the same stretch — except for a drop in July. That helped push Florida’s unemployment rate from 8.6 percent in June to 8.8 percent in July. In July, Florida’s labor force shrunk by about 29,000 people after growing in May and June.

The number driving down the participation rate is the fact that Florida’s population growth has been outpacing the growth of its labor force. So the state isn’t creating enough jobs to keep up with new residents and, presumably, new workers.

It can be hard to keep all of these numbers straight, and the participation rate rarely gets reported when the media dissects monthly hiring data. The chart below converts all three measures — population, labor force and employment — into indices that compare current levels to what they were in January 2006. Remember, unemployment is calculated by subtracting employment from labor force.

Here is a closer look at the trends since 2010:

This will get extra attention Friday, when Florida releases its August employment report. Even if the unemployment rate declines, expect extra scrutiny on the movement of the labor force.

The Miami Herald’s Economic Time Machine tracks 60 local indicators in an effort to chart South Florida’s recovery from the Great Recession. By comparing current conditions to where they were before the downturn, the ETM attempts to measure how far back the recession set the economy. The answer so far: June 2003. Visit ETM headquarters at miamiherald.com/economic-time-machine for the latest updates.

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