Six southern US metro areas: part 6 – unemployment

My sixth blog post on mid-sized cities near the southern section of the Appalachian mountains looks at unemployment (people who do not have a job but are actively trying to find one).

The six areas of interest are: the Chattanooga-Cleveland-Dalton, TN-GA combined statistical area, the Greenville-Anderson-Spartanburg, SC combined statistical area, the Asheville, NC center-based statistical area, the Johnson City-Kingsport-Bristol, TN-VA combined statistical area, the Huntsville, AL center-based statistical area, and the Knoxville, TN center-based statistical area. See the first post in the series for more background.

The source for these results is 36 months of aggregated Current Population Survey microdata, covering January 2016 to December 2018.

Unemployment rate

In a previous post, I calculated the unemployed share of the population. This post looks at the unemployment rate, which is the unemployed share of the labor force. Over the three-year period from 2016 to 2018, the US unemployment rate averaged 4.4%. The unemployment rate varied in the six areas of interest from 2.9% in Asheville to 5.1% in Huntsville. The unemployment rate in this three-year period averages 3.5% in Knoxville, 3.9% in the Greenville-Anderson-Spartanburg area, 4.0% in the Johnson City-Kingsport-Bristol area, and 4.6% in the Chattanooga-Cleveland-Dalton area.

BLS publishes high frequency estimates of unemployment in the Local Area Unemployment Statistics report. I’ve used the multi-year averages instead, to allow analysis of why people are unemployed and for how long they have been looking for a job.

Reason for unemployment

Unemployment can be grouped into four categories, based on what people were doing before they became unemployed: 1) people who quit a job and are looking for a new one (job leavers), 2) people who lost a job and are looking for a new one (job losers), 3) people who are looking for their first job (new entrants), and 4) people who were previously not in the labor force (for example: disabled or ill, taking care of family, retired, or had simply given up hope of finding work) and are now looking for work again.

From 2016-18, nearly half of US unemployment was because people had lost a job. This “job loser” category can be the most painful, as it is perhaps the least voluntary. The person had a job, and presumably wanted to keep it, but could not, and now they are trying to find a replacement job. In contrast, the re-entrant category, which makes up 1.3% of the US labor force, can be a positive indication. From 2001 to 2014, the US labor market was particularly poor for many people, and, as a result, many decided to stop looking for work. But over the past few years, the labor market has improved, and new jobs are pulling people off of the sidelines and encouraging them to look for work again. These people show up as “re-entrants”. Job leavers can also be an indication of a strong labor market. When people are confident that they can find a better job, they are more likely to leave their current job.

In four of the six areas of interest, the unemployment rate is below the US average for the “right” reasons. That is, people are less likely to be job losers or unemployed new entrants. In Knoxville and the Johnson City-Kingsport-Bristol area, more than half of the unemployed are job leavers and re-entrants. Re-entrants are also disproportionately common in the Greenville-Anderson-Spartanburg area.

The job loser share of the labor force is at or below the national average in all six areas, and particularly low in Knoxville and Asheville. The new entrant share of the labor force is above average in Huntsville and Chattanooga. Job leavers are more common in Chattanooga and Johnson City.

unempreason

Duration of Unemployment

Another important determinant of whether unemployment is particularly painful is the duration of unemployment. If people are unemployed for a short time, they may be able to rely on unemployment benefits and, in some cases, their personal savings, to survive. However, a long period of unemployment can devastate savings, exceed the period where unemployment benefits are allowed, affect mental health, and even create a situation where people begin to lose their skills.

Long-term unemployed, measured as those whose unemployment has lasted 27 weeks or more, makes up one percent of the US labor force. The long-term unemployment rate is the same in Johnson City-Kingsport-Bristol and Knoxville. In contrast, it is more common in Huntsville (1.8%) and less common in the Greenville area (0.7%), Chattanooga (0.5%), and Asheville (0.3%).

Short-term unemployment (lasting a month or less) makes up 1.4% of the US labor force, 1.5% in the Greenville area, 1.1% in Knoxville, and 1.3% in Huntsville. The unemployed populations in both Huntsville and Knoxville are more likely to be long-term unemployed than the US average.

unempduration

The next blog post in the series will look at which industries and occupations employ people in the six areas. The jupyter notebook used to create the analysis above is here.

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