New statistics show Nevada's effective jobless rate is 20.3 percent


There's the unemployment rate, and then there's the unemployment rate.

The official number comes out every month, and hovers these days at around 10 percent statewide and 8 percent nationally. Those rates are down from respective recession peaks of roughly 14 percent and 10 percent.

But federal officials on Monday released a more detailed analysis showing Nevada's jobs recovery remains noticeably shakier than the official rate shows, and that's affecting overall economic health in subtle ways, local experts said.

The U.S. Bureau of Labor Statistics crunched new unemployment figures that include discouraged workers who have stopped looking for jobs, as well as underemployed part-timers who would prefer full-time positions. Their finding: Nevada's broader jobless rate, called the U-6 rate, averaged 20.3 percent in 2012, compared with an annual average of 11 percent in the official rate, which strictly counts unemployed people who are actively looking for work.

The higher U-6 rate reflects a shadow supply of jobless workers who don't show up in routine numbers, said Steve Brown, director of the Center for Business and Economic Research at UNLV.

"It means Nevada's consumers don't have as much spending power as regular unemployment statistics suggest," Brown said. "These numbers reinforce the notion that the state's economy hasn't really recovered. We're still very weak." We're less weak than we were, though.

Bill Anderson, a chief economist with the state Department of Employment, Training and Rehabilitation, said the latest U-6 drop is consistent with declines in the official rate, which fell to 10.2 percent in December, down from 13 percent in December 2011. In the fourth quarter of 2011, Nevada's U-6 rate was 23.3 percent. It got as high as 23.7 percent in the first quarter of 2011.

Despite recent declines, Nevada's 2012 U-6 average was considerably higher than the national rate of 14.7 percent. The state also ranked No. 1 for its U-6 rate. California was No. 2, at 19.3 percent, while Rhode Island ranked third, at 17.6 percent.

Nor is Nevada anywhere near its pre-recession jobless lows. During 2006's boom, the state's U-6 rate was 6.8 percent, with an official unemployment rate of 4.1 percent.

So why don't the feds use the U-6 rate to regularly track unemployment? Start with how they obtain the figure. Like all jobless numbers, including the official rate, the data come not from details on people whose jobless benefits are expiring, but from telephone surveys of households.

With surveys on the official rate, the question is simple: Have you or anyone in your household been out of work and actively looked for a job in the last four months?

With the U-6 rate, responses get fuzzy. It's less a matter of fact whether someone is underemployed. A person could say he's really an astronaut, but he's forced to work as a janitor; another might believe she's underpaid or overqualified on her current job when she's neither.

"The U-6 rate might actually have some error in it, whereas the 'headline' rate we look at all the time is a much better indicator, though the main concern with both of these numbers is that the sample numbers are rather small, so the figures can be volatile," Brown said.

The Bureau of Labor Statistics adjusts the U-6 rate every quarter to look at how the labor force is changing. In Nevada, fewer discouraged or underemployed workers likely mean two things, Brown said.

For starters, given that the state's population has been relatively flat, some people are probably leaving. Out-migration would push down the discouraged-worker rate, because those residents would no longer be counted in Nevada's column.

Economic growth provided an assist too: Nevada added 18,700 jobs year to year in December, driven mostly by hiring in hospitality and mining-related businesses, so there were simply fewer people out of work and looking.

Those job gains weren't enough to make a bigger dent in Nevada's U-6 rate because the state is still woefully behind in its labor recovery, Brown said. Employers added 31,100 positions from December 2010 to December 2012, but that was only 18 percent of the 175,000 jobs Nevada lost in the downturn.

The slow decline in U-6 unemployment will probably continue through the first quarter, Brown said, though if tourism spending continues to improve at the rate it did in late 2012, that could cut it to below 20 percent when the next numbers come out, in April.

Contact reporter Jennifer Robison at jrobison@review journal.com or 702-380-4512. Follow @J_Robison1 on Twitter

 

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