Institute for Economic Advancement

Arkansas Employment and Unemployment – June 2011

By , July 22, 2011 10:05 AM

According to new data from the Bureau of Labor Statistics and the Arkansas Department of Workforce Services (DWS), the unemployment rate in Arkansas rose by 0.3 percentage points in June, from 7.8% to 8.1%.  The Arkansas unemployment rate is now higher than it has been at any time during the recession and recovery.  The household survey reported an increase in the number of unemployed by over 2,500 and a decline in the number of employed by approximately 11,000.  At 109,000, the number of unemployed in Arkansas is now at a new all-time high.  As shown in the chart below, recent increases in the Arkansas unemployment rate have been following the national trend, although the rate is still more than one percentage point lower in Arkansas than the national average. 

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The news from this morning’s report was not all bad,  however.  This is one of those occasions when the independent payroll survey provides a different picture than the household survey.  According to the payroll report, employment was up by 2,100 in June (seasonally adjusted), with the May number revised upward slightly as well.  Since the trough of February 2010, nonfarm payroll employment in Arkansas has increased by 27,600.  That increase represents approximately 47% of the jobs lost from the start of the recession until February 2010.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

As shown in the table below, employment gains were concentrated in the service-providing sectors, particularly Education & Health Services and Professional & Business Services.  The crucial sectors of Manufacturing and Trade, Transportation & Utilities showed rather substantial losses for the month.  Employment in the construction sector showed a welcome increase.  Nevertheless, employment in both Construction and Manufacturing are down for the first six months of the year.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

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*Seasonally adjusted data for nonfarm payroll employment, reported in a format compatible with the monthly press release from the Arkansas Department of Workforce Services, are available hereTable – Seasonally Adjusted NFPE

Average Weekly Wages

By , July 13, 2011 4:05 PM

Last week we reported on the comprehensive employment statistics from the Quarterly Census of Employment and Wages (QCEW).  This week the BLS released a detailed report on Arkansas, and the business media have tended to focus on the wages component of that report.  The Arkansas Democrat-Gazette, for example, ran the story under the headline “$738 weekly salary ranks state at 47th.”  The low ranking for wages in Arkansas should come as no surprise.  Arkansas has long been near the lower end of the nation’s income distribution, and relative rankings change very slowly. 

As shown on the map below, there are fairly wide discrepancies in average weekly wages among Arkansas counties.  The fourth quarter data show average weekly wages ranging from a high of $885 in Calhoun County to a low of $436 in Newton County.  None of the counties in Arkansas meet the national average of $971.

Source:  Bureau of Labor Statistics, Quarterly Census of Employment and Wages

Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages

But income comparisons convey only part of the story.  Differences in the standard of living in different states and regions also depend on costs of living.  In general, states with lower wages also tend to have lower living costs, so that differences in purchasing power are not as pronounced as they might appear when considering wage data alone. 

According to data from Council for Community and Economic Research (C2ER), Arkansas ranks as having the fourth-lowest cost of living in the nation.  Based on a sample that includes groceries, housing, utilities, transportation, health care, and miscellaneous goods and services, the C2ER composite index for Arkansas for 2010:Q4 is 90.61 — that is, the cost of living in Arkansas is almost 10% lower than the national average. 

As shown in the table below differences in cost of living tend to narrow the differences in living standards from state to state.  Using the raw wage data alone, Arkansas average weekly wages of $738 amount to only 76% of the national average.  After adjusting for the relatively low cost of living, the purchasing power of those wages are nearly 84% of the national average, and Arkansas moves up the rankings to #40.

Sources:  Bureau of Labor Statistics, Council for Community and Economic Research

Sources: Bureau of Labor Statistics, Council for Community and Economic Research

The tendency for average wages and the cost-of-living to covary positively is not coincidental.  In international economics, the relationship is known as the Balassa-Saumaulson effect, a productivity-based explanation of  why price levels tend to be lower in low-income countries, after adjusting for exchange rates.  Even in an economy as regionally integrated as the United States (and with no variable exchange-rates to consider),  goods that are traded nationwide can have a local service component.  Lower local wages tend to drive down the local (nontradeable) component of costs, keeping the average price level lower than in high-wage areas.  Over time, we would expect (and hope) that wages in Arkansas tend to converge toward the national average.  The key to this process is capital accumulation — of both physical and human capital.  But a side effect of this process is that we should also expect the cost of living to rise as well.  Convergence in standards of living can therefore be an even slower process than wage convergence.

- Updated July 13, 2011 6:55 PM

Quarterly Census of Employment and Wages – 2010:Q4

By , July 6, 2011 4:59 PM

Last week, the Bureau of Labor Statistics released the latest Quarterly Census of Employment and Wages (QCEW).  This is the most detailed and accurate of all the employment measures compiled by the BLS.  Data from the QCEW are available for individual counties and industries, and are used in benchmark revisions to bring greater precision to the monthly estimates of the Current Employment Statistics.  The most recent data (for the months of 2010:Q4) show positive net employment growth for the year:  From 2009:Q4 to 2010:Q4, total employment in Arkansas increased by approximately 7,400 jobs — an increase of 0.65%.

As shown in the map below, employment growth rates varied considerably among counties.  Growth rates ranged from a high of  7.6% in Miller County to a low of -10.3% in Little River County.  There is no clear geographic pattern to employment growth rates by county, but generally, growth rates tended to be higher in the northern portion of the state.  Of the state’s 75 counties, 41 showed positive growth rates while 34 contracted.

Source:  Bureau of Labor Statistics, Quarterly Census of Employment and Wages

Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages

The breakdown of employment growth by industry shows that most of the employment growth during 2010 took place in the service-providing sectors.  Professional and Business services (which include temporary employment agencies) posted a growth rate of over 4%.  Education and Health services continued its robust growth (+1.4%), and Trade, Transportation, and Utilities made a significant rebound (+1.5%).  Both Financial Services and Information Services contracted over the year, but both are relatively small sectors so they did not contribute much to overall job growth.

Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages

 

In March 2012, the monthly data from the Current Employment Statistics will be revised using information from the QCEW.   In some previous years, these benchmark revisions have been substantial.  For example, in early 2010, revised data showed a loss of more than 18,000 jobs in Arkansas that had not  been reflected in the monthly CES data for 2009 (see Forecasting a Revision of History).  The data released last week indicate that next year’s revisions are likely to be relatively small.  Our estimates indicate that the revisions will show somwhat higher employment for the first half of the year, but a downward revision to fourth-quarter data. 

Sources:  Bureau of Labor Statistics/QCEW, Projections by IEA

Sources: Bureau of Labor Statistics, Projections by IEA

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