ECONOMIC TIME MACHINE

What if Florida’s workers never got discouraged?

 

Florida’s labor force grew during most of the recovery, but not as quickly as its population has.

dhanks@MiamiHerald.com

What if Florida workers never got discouraged?

Florida Gov. Rick Scott has gotten some heat recently over how much of Florida’s unemployment decline is thanks to hiring, and how much is thanks to unemployed workers giving up their job search and no longer being counted in the unemployment rate.

To understand the debate, you have to know how the unemployment rate is calculated. On Friday morning, Florida will release federal statistics showing how many people in the state are employmed, and how many people in the state are unemployed but actively looking for a job.

Those two counts are combined into the a pool known as the labor force, and the unemployment rate is calculated by dividing the number of unemployed by the number of people in the labor force. As of July, Florida’s unemployment rate was 8.8 percent. That’s down about two points from when Scott took office in January 2011, and also represents one of the fastest drops in the country.

But is that thanks to more hiring or more people giving up?

It’s hard to say, because some people drop out of the labor force because they can’t find work and some drop out because they get old and retire.

Here is a look at monthly changes in all three measures: labor force, employment and unemployment. The labor force has been growing pretty steadily until the start of 2012, when there were some sharp drops. Employment has been on the rise since 2009, with the one dip coming in July. And unemployment has been down since the summer of 2011 — until June, when the jobless rolls began climbing again.

What if those numbers were different?

The chart below shows Florida’s actual unemployment rate, and what it would be if the labor force never shrank. On those months when the labor force did shrink, the chart simply replaces it with the previous high. I started the calculation in January 2010, a year before Scott took office.

As you can see, the unemployment rate would indeed be worse if the labor force had kept growing through 2012: 9.1 percent versus 8.8 percent. That’s a difference of .03 percentage points — not a dramatic gap, but a difference nonetheless.

But there’s also a line showing the unemployment rate if Florida’s “participation” rate never changed. That’s portion of Florida’s 15 million residents who are in the labor force — again, either working or looking for work.

That’s been on the decline since 2007, and now stands at exactly 60 percent. The decline shows the real asterisk behind Florida’s improving unemployment picture.

If participation in the labor force had kept up with Florida’s population growth — federal estimates say the state has about 450,000 more people than when Scott took office — the unemployment rate would be 11.5 percent by now. And it would have been 12.2 percent when Scott’s tenure began.

That would have resulted in a drop in one percentage point, not the 2.2 points Scott can point to using the raw numbers.

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.

Read more The Economic Time Machine stories from the Miami Herald

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