peel back effect

Delaware jobless rate inches downward

Eleanor La Prade
Posted 4/17/15

DOVER — Delaware’s unemployment rate was 4.6 percent in March, down from 4.8 percent from February.

The monthly labor review, released Friday, was once again “extremely positive,” state …

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Delaware jobless rate inches downward

Posted

DOVER — Delaware’s unemployment rate was 4.6 percent in March, down from 4.8 percent from February.

The monthly labor review, released Friday, was once again “extremely positive,” state economist Dr. George Sharpley said.

“I don’t see anything on the horizon that’s going to throw a monkey wrench in here,” he said. “We expect job growth to remain strong, and as the unemployment rate falls, that’s going to push up wages.”

In March, seasonally-adjusted nonfarm employment was 444,500, up from 442,600 in February.

In the meantime, there were 21,000 unemployed state residents in March, compared to 26,700 the same time last year, when the unemployment rate was 6 percent.

The national unemployment rate in March this year was 5.5 percent, unchanged from February. In March 2014, the U.S. unemployment rate was 6.6 percent.

Since March 2014, Delaware’s total nonfarm jobs have increased by a net gain of 8,900, a rise of 2.1 percent.

Nationally, jobs during that period increased 2.3 percent.

Dr. Sharpley noted that employment is “a little bit out of joint with the jobs numbers.”

“I suspect that (the employment number) is a little overdone,” he said, but he still called the latest estimates “solid growth.”

Only one measure looks like a cause for concern: the average weekly earnings, which fell over the past few years.

An April 4 piece in The Economist magazine entitled “The First State comes last” even noted the dropping hourly and weekly earnings in Delaware.

Dr. Sharpley said that the measure is unreliable, though, and contradicts total wage numbers from more complete payroll data.

Average weekly earnings are based on a monthly business survey from the U.S. Bureau of Labor Statistics. Dr. Sharpley said that only around 320 employers respond to the survey each month — a 20 percent response rate.

In comparison, he said, the total wage measure comes from the complete payroll reports of all 30,000 employers in Delaware subject to unemployment insurance regulations.

“There has been some concern that while the unemployment rate has dropped and jobs are growing at an impressive pace, average pay has not kept up,” he noted in the labor review.

“Part of this stems from pay usually being one of the last indicators to pick up during an expansion, but part is due to confusion as to which of two measures to pay better reflects actual economic activity.”

Total wages from payroll data increased by 0.6 percent in 2013 and by 2.3 percent in 2014; average earnings from the survey fell by 1 percent in 2013 and by another 0.7 percent in 2014, then jumped up by 5.3 percent for the first two months of 2015.

According to the payroll data, the average wage in Delaware was $53,217 for all four quarters of 2014, up from $52,040 in 2013.

Going further back, from 2007 to 2014, total wages are up by 12.7 percent, while the survey-based earnings are down by 5.3 percent.

“The last thing we really want are two conflicting data sources and people being able to pick and choose what suits their purposes,” Dr. Sharpley said.

It’s fine if the two data series are equally valid, he added, but the payroll data is “far superior” to the business survey.

Last month, he dropped information about average earnings from the monthly review. They are still available online.

“We dropped that because it’s misleading, it’s not accurate,” he said.

After corresponding with the Bureau of Labor Statistics, he said that officials have admitted “there’s problems with the data.”

“...we need to do more research, they need to put in some variance measures and things like that.”

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