The Best Job Numbers Ever In November! I Swear!

The Bureau of Labor Statistics today reported that the unemployment rate in Pennsylvania fell three-tenths of 1 percentage point to 7.8% and non-farm payrolls made a slight gain of 1,900 jobs in November.

Governor Tom Corbett's press office chose to highlight the November job numbers with the headline Pennsylvania Unemployment Decline Highest in Thirty Years

In November, the number of Pennsylvania unemployed fell by 16,000, which is the biggest decline since July 1983 when the number of unemployed fell by over 101,000 (yes, you read 101,000). That was the biggest decline in the number of unemployed on record!

It is of note that in July of this year the number of unemployed in Pennsylvania climbed by 21,000, but the Governor’s press office choose not to go with the headline Pennsylvania Unemployment Increase The Largest Since The Great Recession! Instead, we had the more cautious Pennsylvania’s Employment Situation for July 2012

Public relations hyperbole aside, the November job numbers are mostly good. After a summer in which the unemployment rate in Pennsylvania climbed above the national unemployment rate, November's decline is a welcome change. Less positive is the fact that the unemployment rate in Pennsylvania at 7.8% is unchanged from its level a year ago.

Job growth in November was somewhat disappointing, with the commonwealth adding a little less than 1,900 jobs over the month. While private-sector job growth was stronger (+7,200 jobs), a somewhat unexpected decline of 5,300 in public-sector employment is a worrying sign.

Looking back over employment change from November to November of each year between 2009 and 2012, total nonfarm and private-sector payrolls haven't grown as fast in the last year as they did in the previous two years (See Figure 2).

Note that from November 2010 to November 2011, total nonfarm payrolls grew by just 49,100 jobs, while private-sector payrolls grew by over 72,000. The difference is explained by the layoff of thousands of teachers and other education professionals prior to September 2011, the start the last school year.

The most recent 12-month period, November 2011 to November 2012, was similarly disappointing, with a noticeable slowdown in the growth of private-sector payrolls. The recent more sluggish growth in payrolls is a reflection of a combination of factors: in part it reflects the loss of private-sector demand that results when thousands of people are laid off and spend less money, but it also reflects a disappointing year for the national economy and a sharp loss of employment in the construction industry.

One of the favorite talking points of the Commonwealth Foundation and Governor Corbett is that private-sector job growth in 2011 was the best since the late 1990s. As you can see, 2011 was a very good year for private-sector job growth. 2012? Somewhat less impressive.

The public relations professionals in the press office have thought long and hard about this problem. The solution to the death of this talking point is to obscure 2012's less-than-stellar performance by summing job growth since January 2011:

Since January 2011 the state has added 109,400 private-sector jobs with 51,000 of those being added this year.

So overall the Pennsylvania labor market is improving slowly. The jobs deficit, or the difference between the number of jobs Pennsylvania has and the number it needs to regain its pre-recession employment rate, is 274,400. To eliminate the jobs deficit by November 2015, Pennsylvania needs to add on average 11,000 jobs a month. In the last 12 months, Pennsylvania has added 3,500 jobs a month.

So growth remains insufficient to quickly bring down the unemployment rate. Ignoring the fiscal cliff for the moment, the outlook for 2013 is good. It appears that another wave of teacher layoffs is unlikely this far into the recovery, so the scope for the Legislature and the Governor to do any additional harm to the economy is somewhat limited. There is a slight chance of increased infrastructure spending both by the federal government and by the state. This would be welcome news for the construction industry, which has shed almost 11,000 jobs in the last 12 months.

So there you have it, some restrained cheer to take with you into the holiday season.

My best to you and your loved ones!

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