As Governor Touts Jobs Unemployment Rate Stalls

Oct 24, 2014

Florida's unemployment had been declining rapidly until December 2013. Since then it's been hovering near 6.2 percent.
Credit FRED - Federal Reserve Economic Data

Perhaps the most common refrain in the Florida governor’s race has been jobs – how many current Gov. Rick Scott has created and how many former Gov. Charlie Crist lost.  But despite painting himself as a job creator, Gov. Scott has presided over ten straight months of stagnant unemployment numbers. 

If you’ve been in Florida this last month and you’ve got a pulse you’ve probably heard Gov. Scott talking about his record on jobs.  It’s been a consistent, doggedly verbatim talking point throughout the campaign and at each of the three televised gubernatorial debates.

But while Scott attempts to use jobs to distinguish himself from Democratic challenger and former governor Charlie Crist, the unemployment rate has been stagnant for nearly a year. 

In December of 2013, the unemployment rate was 6.3 percent.  And from that December to this August the rate has bounced back and forth from 6.3 to 6.2.  This September, the most recent month on record, the unemployment news got a little better, but only a little – the rate dropped two tenths of a percent to 6.1.  This is the lowest level since June of 2008, and that’s nothing to scoff at, but the unemployment rate by itself paints a pretty discouraging picture of recovery in 2014. 

Florida’s Department of Economic Opportunity keeps track of these numbers and executive director Jesse Panuccio says there’s a very good reason for this slow improvement.

“The unemployment rate is based on how many people are in the work force and actively seeking work, and then how many people have jobs, and so the unemployment rate can level off when you have a lot of people coming back into the work force,” Panuccio says.  

The DEO’s most recent figures indicate just over 200,000 jobs have been added to the Florida economy in the last year.  So the rate has stayed steady because while 200,000 people have gotten jobs, almost the same number have entered or re-entered the labor force. 

University of Florida economist Chris McCarty explains recessions typically follow a standard playbook, but the most recent one has been an outlier.

“A recession hits, unemployment goes up, people leave the labor force, and then as we work through the recession unemployment comes down, people who left the labor force come back in, and we’re off and running again,” McCarty says.  “In this one, unemployment went up, it took a long time for it to get back down, and people who left the labor force have – a lot of them – have not returned.  

“There’s a big question out there,” McCarty says, “as to whether or not they’re going to return or if they’re just permanently out.”

McCarty says the number of people who have left the labor force highlights an important shortcoming for the standard unemployment measure known as U3 – declining rates are not necessarily indicative of positive economic growth. 

“U3 doesn’t have the same meaning it used to when it comes down, because now it’s coming down, partly because we’re creating jobs, but partly because the denominator gets smaller – people have left.  So a lot of economist are now talking about U6,” McCarty says.

U6 unemployment is another measure calculated by the U.S. Bureau of Labor Statistics.  It goes beyond the pool of people who are out of work and actively looking – the group that makes up U3 unemployment – to count three other groups.  U6 adds in people who are discouraged and not looking for work, people who are marginally employed – that is, employed but unable to make ends meet, and people who are employed part time. 

U6 is a much broader measure of unemployment, so it’s understandable it would be higher than U3.  But McCarty compared to past rates of U6 unemployment, the post-recession levels are still higher than they should be.

“If you look at that U6 unemployment it’s actually disturbingly high, not just for Florida, but nationally,” McCarty says.  “So a lot of the jobs that we’ve created post great recession, have been part time jobs and the kind of jobs that – not particularly the kind of jobs people want.”

One of the questions this slow recovery has raised is whether or not we’re settling into a “new normal” where unemployment stays somewhere near 6 percent and high-quality, full-time work remains difficult to come by.  McCarty is cautious: he doesn’t think anyone knows the answer to that question yet. 

But Panuccio is a bit more optimistic.

“Given the deep recession we had, it takes some time for people to get confident enough, and businesses to get confident enough to establish lasting practices,” Panuccio says. “So I’m not wringing my hands yet.  I think we’re still in a growth mode in Florida, and over the next year or two we’ll see how it shakes out.”

But then again, there’s good reason for him to be bullish on Florida – after all, there’s an election coming up.