ECONOMIC TIME MACHINE

A shrinking labor pool masks weak employment numbers in Miami and the U.S.

 

dhanks@MiamiHerald.com

In Miami-Dade, and across the country, a lack of job applicants makes the employment picture look better than reality.

On Friday, the August jobs report disappointed on all fronts, with fewer than 170,000 jobs produced at a time when economists expected to see at least 180,000 new payroll positions. And while the unemployment rate dropped a tenth of a percentage point to 7.3 percent, the decline came thanks to about 300,000 fewer people looking for work. If the labor force hadn’t contracted, the U.S. unemployment rate would still be at 7.4 percent.

A similar trend is playing out in Miami-Dade, where unemployment stands at 8.8 percent but would be 9.3 percent if the labor force hadn’t declined for the last five months. Since January, the number of employed people in Miami-Dade dropped by 19,000 people. But the labor force, which includes people who are working as well as people looking for work, dropped much faster, down 35,000 people.

Not so in Broward, where unemployment hit 5.8 percent in July thanks to growth in both employment and the labor force.

The unemployment rate technically measures the portion of people who want to work but can’t find jobs. In monthly surveys, the federal Labor Department polls households for the reasons why people aren’t working. Those who don’t want to work don’t get counted in the labor force, while those who say they want a job but don’t hold one are included in the pool.

Not everyone drops out of the labor force because they think finding a job is hopeless. Federal statistics show that in August, about 866,000 thousands people were described as “discouraged workers” while 1.4 million people cited other reasons, including illness, family obligations and transportation issues.

The Miami Herald’s Economic Time Machine seeks to give the long view on the latest financial numbers for South Florida. Visit miamiherald.com/economic-time-machine for analysis of the numbers that drive the local economy. Our ETM index tracks more than 40 local indicators to measure where the economy has “landed” post-bust when compared to earlier economic conditions. The latest reading: August 2004.

Read more The Economic Time Machine stories from the Miami Herald

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