Employment

September Employment Update: Sustained Trends Over Time Paint the Most Accurate Picture


What do Elkhart, Indiana and El Centro, California have in common? Admittedly, not much. Yet these two metro areas posted the largest year-over-year decreases in unemployment rate, according to the most recent Bureau of Labor Statistics Metro Area Employment and Unemployment report for September 2012.

El Centro’s unemployment rate dropped by 3.1 percent between September 2011 and September 2012, while Elkhart’s unemployment rate fell by 3.0 percent during the same period.

Despite this modicum of good news, both metro areas have a long way to go given the severity of the economic downturns in their local economies over the past decade.

In fact, while El Centro posted the largest decline in its employment rate, it still retains its dubious distinction as one of the two highest metro areas with the highest unemployment rate in the nation.

Unemployment rates make the headlines, but employment growth trends, often overshadowed, can be an equally telling indicator of an area’s economic health. The Elkhart-Goshen metro area has fared well in recent job growth as well as in unemployment decline. In fact, it ranks among the top three metro areas for the largest year-over-year percentage gain in nonfarm employment (+8.0 percent).

Still, like many other cities with a heavy reliance on manufacturing, Elkhart fell upon pretty tough times over the past decade, and this good news, while welcome news, does not mean its troubles have passed.

Both do point to the importance of looking beyond sheer numbers or rankings. The New York-Northern New Jersey-Long Island, NY-NJ-PA metro area almost always dominates employment growth rankings by the numbers, but rarely on a percentage basis. It takes much slighter changes in the numbers to impact higher percentage changes in smaller metro areas than in larger ones.

Despite this modicum of good news, both metro areas have a long way to go given the severity of the economic downturns in their local economies over the past decade.

In addition to unemployment and employment trends, labor force participation rates need to be considered as an important factor in the equation. Have out-of-work, but qualified, age-eligible employees given up on looking for work? Taken early retirement? Dropped out of the workforce to raise a family, pursue a hobby, or volunteer instead. If so, unemployment rates may appear lower than they actually are.

Together, sustained trends in unemployment, employment and labor force participation rates over time paint the most accurate picture of an area’s economy. Neither Elkhart nor El Centro is celebrating an economic victory just yet. But in both cases, a turnaround in a negative trend could signal better times ahead.

MuniNet Guide provides snapshot views of metro area employment, unemployment and labor force trends, along with comparisons across time and to state and national benchmarks. Visit the Employment & Unemployment Trends for U.S. Metro Areas page for an index of metro areas, listed here by state.

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