State jobless rate dips again, to 6.4%

Posted: June 21, 2014 at 3:40 a.m.

Arkansas' unemployment rate declined in May for the eighth-straight month, falling to 6.4 percent, the U.S. Bureau of Labor Statistics said Friday.

The rate dropped from 6.6 percent in April and is more than 1 percentage point lower than the 7.5 percent rate in May 2013. The national unemployment rate last month was 6.3 percent.

One reason for the drop in Arkansas' unemployment rate, however, isn't due to a burgeoning economy as much as it is to the continuing shrinkage of the state's labor force, economists said.

Arkansas is not seeing a recovery, said Marc Fusaro, associate professor of economics at Arkansas Tech University.

"It's always nice to look at the unemployment rate falling, but there are an awful lot of people leaving the labor force," Fusaro said.

The state's unemployment rate drop mirrors a trend in the rest of the country, but "it's not clear that the fundamentals of the economy are improving," said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas in Fayetteville.

"The whole reason the unemployment rate improved [in May] was due to the fact that the numbers of those previously listed as unemployed are now just gone from the labor force," Deck said. "That's not how you want [the unemployment rate decline] to happen. We'd rather have it happen as we see employment increasing rapidly enough to take [the unemployed] in."

Statistically, the unemployment rate isn't much different than it has been for several months. The statistical margin of error in calculating the unemployment rate in Arkansas is 0.9 percentage point, according to the Bureau of Labor Statistics in Dallas.

The labor force is derived from adding the number of employed Arkansans and the number of unemployed in the state, considered to be those actively seeking a job.

Since it peaked at 1,367,472 in May 2008, Arkansas' labor force has lost about 52,270 workers, more than the population of Pine Bluff. There were 1,315,200 Arkansans in the labor force last month.

For just the past two months, more than 15,000 Arkansans have exited the labor force, said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock. The labor force actually improved from August to March by 5,672, but that was more than wiped out in the past two months, Pakko said.

Retirees, people returning to school in larger numbers, people moving out of the state and discouraged workers giving up looking for work are all reasons for the labor force decline, Deck said.

Almost half of the decline in the U.S. labor force since 1999 can be explained by long-running demographic patterns, such as the retirement of baby boomers, the Federal Reserve Bank of Chicago said in a 2012 report.

"These patterns are expected to continue, offsetting [labor force] improvements due to economic recovery," the report said.

Increasing retirements can be attributed to the aging baby boomer generation, but national statistics show the labor force also declining in the 25-55 age group, Deck said.

"And I don't think that Arkansas is different in that regard," Deck said.

Arkansas' unemployment rate is calculated through a survey of about 800 households in the state.

But a more comprehensive poll -- taken from nonfarm payroll data submitted by thousands of Arkansas employers -- continues to show that the number of jobs in the state is rising instead of falling. The nonfarm payroll survey indicates that Arkansas has added 13,500 jobs since May last year.

Much of the gain in nonfarm jobs came in the leisure and hospitality sector, which added 3,000 jobs over the past year, Fusaro said. The biggest chunk of that came in food services jobs, Fusaro said.

The retail and wholesale trade categories added 4,400 jobs, Fusaro said.

Arkansans are migrating to the state's urban counties, said Greg Kaza, executive director of the Little Rock-based Arkansas Policy Foundation.

Thirty of Arkansas' 75 counties have added jobs since the end of the recession in June 2009, Kaza said. The biggest gains were concentrated in the urban areas of Benton County, up 9,718; Washington County, up 5,244; Craighead County, up 4,379; Faulkner County, up 2,210; and Pulaski County, up 1,686.

Nationally, the unemployment rate fell in 20 states and rose in 16.

Rhode Island had the highest unemployment rate in the country at 8.2 percent, followed by Nevada at 7.9 percent, Kentucky and Mississippi at 7.7 percent each, California at 7.6 percent, and Illinois at 7.5 percent.

North Dakota again had the lowest unemployment rate at 2.6 percent, followed by Vermont at 3.3 percent, Utah and Nebraska at 3.6 percent each, and South Dakota at 3.8 percent.

Business on 06/21/2014