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Jobless rate drops, but not because more are working

Arizona jobless rate inches up

The state’s jobless rate shrank by close to 45% last month.

But a good portion of the drop in the seasonally adjusted unemployment rate from 10.7% in July to 5.9% in August has nothing to do with a bunch of Arizonans suddenly finding work. It’s because some gave up.

A lot of them, in fact.

By contrast, the employment levels – the number of folks actually working – went up by just 32,109.

What makes all that significant is that the unemployment rate is a simple question of math.

Surveyors ask people if they’re working and, if not, are they looking. Those two figures combined create the labor force.

Put simply, if the number of people who say they’re looking drops sharply, that changes the whole ratio. And the unemployment rate goes down.

And Doug Walls, director of research administration for the Arizona Office of Economic Opportunity, said the state’s labor force participation in August – the number of people working or looking for work as a percentage of the total adult population – dropped to just 58.5%. That’s the lowest rate on records going back to 1976.

So where did those people go?

“There are a lot of different reasons why an individual might exit the labor force,” he said. That can include not just retiring but loss of a job and waiting for it to return.

“We’re not able to dive into those and break those out at this time,” Walls said, with no current data on people who the federal government classifies as “discouraged workers.”

And Walls said that there have been large fluctuations in the labor force in the past few months.

Other figures from Thursday’s report also suggest that the 5.9% jobless rate is a continued weakness in Arizona’s labor market.

There was a gain of 79,200 jobs between July and August. But 44,600 of those were in state and local education – usually folks not on contract like bus drivers, cafeteria staff and custodians – typical at this time of the year. And another 6,900 of the jobs gained were at private schools, largely postsecondary education institutions, also typical for August.

Factor those out and it puts the month-over-month job growth in the private sector at just 23,500. And it still leaves private sector employment in Arizona at 94,700 less than the same time a year earlier.

 

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