June’s jobs report saw Oklahoma’s unemployment rate hold steady at 5.3 percent, the fifth lowest rate in the nation. But the Bureau of Labor Statistics’ household employment survey showed that the number of employed Oklahomans declined by 6,900. To try to make sense of the numbers, I spoke with Lynn Gray, Director of the Economic Research and Analysis Division of the Oklahoma Economic Security Commission. This is an abridged and edited transcript of our conversation.
David Blatt: If we step back and look at what’s happening in the labor market in Oklahoma over the past six months or the past year, what is the story there?
Lynn Gray: Well, it’s actually kind of a disappointment. The unemployment rate in the state has dropped from 7.0 percent to 5.3 percent. The number of unemployed has dropped by 30,000 – from 122,000 to 92,000. On the surface that look great, that is a very good recovery. The average person who hears this might assume that 30, 000 people went from unemployed status to employed status. But that hasn’t happened. Employment is only up by about 6,400 in the household survey in the past year. The number of unemployed has fallen by 30,000, but the number of employed is only up by 6,400… This tells me that this really is a weaker recovery than just the unemployment rate by itself would indicate.
DB: What explains this discrepancy?
LG: What’s happened is that we’ve had a significant decline in the labor force. You’ve had people who are leaving the ranks of the unemployed not because they are finding work, but because they are becoming discouraged. As people exhaust their unemployment insurance benefits they no longer have the specific requirement that they actively look for work. I’m afraid that’s what was keeping them officially in the labor force, but as they exhaust their benefits, they perhaps realize that there is not an employer in their area that is going to hire them with the economy the way it is, perhaps their job skills have become a little outdated or maybe there is a structural imbalance, there is no one in their area that needs their job skills, so they do the rational thing and quit looking for work… So when you hear that unemployment declines to 5.3 percent, it sounds really good, but it doesn’t feel that way to the average person on the street because they at least have a sense that employment hasn’t grown that much.
DB: To what extent have we seen shrinkage in the active labor force in recent months or over the last year?
LG: Over the last year, the labor force went down about 24,000 – from 1,754,000 to 1,730,000.
DB: Once we look at particular sectors, where are we seeing growth and what sectors are showing signs of continued or greater weakness?
LG: One of the bright spots we’ve had in the last year in terms of industry employment is manufacturing. In manufacturing, for decades, jobs have been in decline. But in the last year in Oklahoma we have added 11,200 jobs in manufacturing. It has been growing at 9.1 percent rate…It’s a cyclical industry and even though we don’t have a strong recovery, we’ve added manufacturing jobs. I think probably some of that is tied to the oil and gas industry and that is strong, growing at 7.1 percent rate right now for employment. And I think that part of that is spilling over into manufacturing
DB: What about areas where we are seeing weakness or job loss?
LG: Government hasn’t been strong in the last year, hasn’t seen a lot of growth there. We’re not seeing the job loss, but the healthcare industry is slower than it’s been previously. Only about 1.8 percent job growth there last year, so that has slowed down.
DB: We known that, at least if we look at unemployment rate, Oklahoma is doing much better than the rest of the country. What would you attribute that to?
LG: We always tend to see that. That is not unusual for us to have a lower unemployment rate than the country as a whole. When we are looking at the last four or five years, when we look at the impact of the recession on Oklahoma and around the country, a couple of things stand out to me. One, we didn’t have the same impact in the housing crash that a lot of other states saw – the tremendous decline in construction jobs, the displacement of the real estate-finance industry, we didn’t see that here. We’ve had high energy prices for a while now and that obviously has been a boost to our economy. So I think there are some macro reasons our unemployment rate has stayed quite a bit lower than the country as a whole. But we still have to remember: this decline that we had from 7 percent to 5.3 percent, it’s not just people finding work; it’s mostly people leaving the labor force.
DB: Where do you foresee things going over the next year?
LG: I’m still expecting very slow growth. I don’t think that we are going to have another recession…although, I’m a little less optimistic than I would have been a year ago. But I really fear that we are looking at some long term slow GDP growth and slow employment growth. I mean slower than what we are used to.
Please also see our related posts, “Falling Unemployment: Are workings getting jobs or getting discouraged” and “May Employment Report: Unemployment numbers improve again but job creation remains sluggish“