Mixed Signals in Seasonal Job Trend, Outlook

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Mixed Signals in Seasonal Jobs Trend.pdf

The weather clearly indicates that summer is approaching. Soon, school final exams will have concluded, and the summer seasonal labor market will be in full swing. While the hiring boost around the winter holiday season is well known, summer employment is the other, lesser known but significant seasonal swing. Patterns in summer employment have a story to tell about the health of our economy.

Until 2008, our region experienced what now seems like a low unemployment rate, about 5 percent. The local unemployment rate the first three months of this year is about 9.5 percent, compared to 10.3 percent in 2010.

This year, the pre-summer season already has seen fewer unemployed people. This lower unemployment rate can be because more people are working or because fewer people are actively seeking work. When calculating the unemployment rate, the Bureau of Labor Statistics defines someone as "unemployed" if he or she currently does not hold a job but is actively seeking one.

Therefore, if people become discouraged and stop actively seeking jobs, they are no longer considered "unemployed." If worker discouragement was widespread, this would be a negative indication for the economy. If, however, more job-seekers were able to find work then the lower unemployment rate would be an obvious positive signal.

Taking a closer look at pre-summer and summer employment lends some insight. Compared to 2010 we have experienced a relatively large decline in the number of unemployed in the first three months of the year, 8,800 fewer unemployed individuals. During that same time, however, the region has added only 2,100 new jobs. This relatively large decline coupled with this relatively small increase in jobs suggests that even more workers this year are discouraged and are giving up looking for jobs.

This tenuously stable job landscape is the first time since 2008 that pre-summer jobs have not declined. If summer employment follows suit, this may be indicative of a turnaround. Even if the number of jobs increases, the unemployment rate could also increase if discouraged workers re-enter the job market more quickly than new jobs are added.

Following the 2001 recession, the unemployment rate actually increased slightly even as the number of jobs also increased, which may have been due to people who had been discouraged re-entering the labor market.

We should be encouraged that this year is finally experiencing a halt to the decline in local employment. Even this small increase in employment over last year could have a substantial impact on our region if it is sustained. In the past decade, the change in pre-summer season employment has been a strong indicator of the summer swing, suggesting that this slight increase in total employment could be realized during the summer as well.

Three months of slow but steady growth could become six, and then eight and so on. Let's hope that as the temperatures rise, so too does our number of employed workers.

Jennifer Pitzer is a Research Associate, PhD, at the University of Cincinnati's Economics Center.