This article first appeared in the St. Louis Beacon: July 16, 2008 - St. Louis' unemployment numbers may not be as bad as they sound
Every month, the federal Bureau of Labor Statistics releases numbers. Lots of numbers. Consumer Price Index, national employment and unemployment, state and local employment and unemployment. It goes on.
But what do they mean? And what does it mean, specifically, when they report that unemployment in St. Louis rose to 6 percent in May of this year from 4.7 percent in May of 2007?
Is that serious? Is it a big rise? Should people be freaking out?
It took Steven Fazzari a few minutes to answer those questions.
The professor of economics at Washington University and associate director of the Weidenbaum Center looked at the numbers and did a little analysis.
In April, the St. Louis area's unemployment rate was 5.3 percent. That's not seasonally adjusted -- meaning it doesn't account for normal fluctuations that happen seasonally throughout the year, such as college students entering the job market during the summer. In May, the unemployment rate was 6 percent.
"Historically, that would be a big jump," Fazzari says.
Because May's unemployment rate wasn't adjusted for seasonal effects, Fazzari looked at a year's worth of numbers. To get a real comparison, he lookd at unemployment numbers from June 1, 2006, to May 31, 2007, and compared them to those from June 1, 2007, to May 31, 2008.
In 2008, the average unemployment rate in St. Louis was 5.7 percent. In 2007, it was 5 percent.
"That's a pretty big jump and that is somewhat reflective of the national trend," he says.
Nationally, those numbers were 4.9 percent in 2008 and 4.5 percent in 2007.
And St. Louis has been ahead of the national trend for unemployment for awhile. From 2001 until about 2004, the city's unemployment rate was lower or about the same as national average, Fazzari says. In 2005, it started moving higher than those national rates, and that trend has continued ever since.
"It's clearly rising in the last year or so," Fazzari says. "Especially in the last six months."
The Numbers Might Lie
Something else that's tricky about May's unemployment numbers is that they're preliminary, according to William Rogers, assistant professor of economics at the University of Missouri-St. Louis. And that means those numbers can be revised.
"It is tough to tell how much of that is a real jump and how much of that is an error."
Another factor the unemployment rate doesn't take into account is the discouraged worker effect. That's when someone who is unemployed stops looking for work. They're no longer counted, so the actual number of unemployed could be even higher.
The unemployment numbers are in line with the Midwest, however. And though there is a rise, Rogers and Fazzari both offer a little perspective.
"Historically speaking, the rate is not that high," Rogers says. "In the early '80s, people would have been thrilled to have 6 percent unemployment."
Then, Fazzari says, unemployment was around 10.8 percent.
Even today, Rogers says cities such as Detroit, Mich., might be happy with a 6 percent unemployment rate. Right now, it has unemployment at 10.2 percent.
El Centro, Calif., has the highest, according to the Bureau of Labor Statistics, at 19.2 percent.
Idaho Fall, Idaho, has the lowest rate at 1.9 percent.
Ahead Of The Curve
More numbers -- different numbers -- might tell the story of employment changes in St. Louis better than unemployment rates.
According to Rogers, since 2000, employment in motor vehicle production has declined by 46 percent in St. Louis, compared to 24 percent nationwide.
Employment in manufacturing has declined by 22 percent, compared to 20 percent nationwide.
Also, telecommunications employment has declined 22 percent compared to 26 percent nationwide.
But it's not all decline. Healthcare has grown in St. Louis at 14 percent compared to 21 percent nationally.
And employment in education has grown by 24 percent, compared to 23 percent nationally. That growth is also seen in the leisure and hospitality industry and business and professional services in the area, Rogers says.
But what about InBev's purchase of Anheuser-Busch? While it's made big news, the effect on the area's unemployment numbers might not.
The company employs about 6,000 people. Say 1,000 people lost their jobs, Fazzari says. The bump in unemployment might go from 6 to 6.2 percent. Noticeable, Fazzari says, but not catastrophic.
When McDonnell Douglas left St. Louis, people expected a large increase in the local unemployment rate, says Rik Hafer, professor of economics and finance and director for the Office of Economic Education and Business Research at Southern Illinois University, Edwardsville.
One of the things that surprised people back then was how it didn't appreciably affect the unemployment rate, he says.
That's because people were able to find other jobs with the skills they had.
A Look Into The Crystal Ball
Ultimately, if May's unemployment numbers are correct, what does that say about the economy in St. Louis?
Nothing significant, Rogers thinks.
Unemployment tends to be a lagging indicator, he says. The numbers don't necessarily tell us what's ahead. Sometimes, they don't even truly reflect what's going on, like when restructuring is happening. Unemployment remained high even after the end of the recessions of the '90s and 2001.
What's more important is the trend in the unemployment statistic, Hafer says. And while the trend has been a rise in unemployment both in St. Louis and nationally, the changes haven't been unforeseen, he says.
Here, it has a lot to do with the mix of business in St. Louis, which is moving away from manufaturing and production. Omaha, for instance, has mostly white collar jobs. The unemployment rate there was 3.4 percent in May.
Ultimately, the monthly unemployment statistics can be informative when looked at along with other things, Hafer says, but they're not necessarily a sign of things to come.
Kristen Hare is a free-lance journalist.