Wednesday, May 20, 2015
Erica Groshen Gives Labor Market Prognosis
Dr. Erica Groshen, head commissioner of the Bureau of Labor Statistics (BLS), provided a snapshot of today’s national, statewide, and regional recovering labor market. She spoke to an informed audience on May 19 as part of the City Club’s Business Leaders Series. Groshen highlighted the challenges the post-recession economy still faces while emphasizing the importance of the BLS in helping citizens navigate the fluctuating market.
The good news is that unemployment rates are dropping both in Ohio and in the Cleveland metropolitan area.
“The rates for the state and for all three areas have returned or nearly returned to where they were prior to the recession,” Groshen said, referring to the three largest metropolitan areas in Ohio: Columbus, Cleveland, and Cincinnati.
Groshen detailed which areas of the labor market have fully recovered and which are still struggling to rebound from the recession.
On the positive side, layoffs have decreased and the “quit rate” is up; people are more willing to take a risk and quit their job in hopes of moving up the employment ladder. Moreover, as underemployment decreases, employers have been relaxing hiring standards, a good sign for those seeking jobs.
Hours are back to “pre-recession highs”; however, this is not a total signal of economic growth, as many people seeking full-time jobs are trapped in part-time employment. Similarly, increases in hiring reflect recovery more than growth.
“We see the hiring by firm births continues to be very depressed,” Groshen said, referring to new companies. “[Hours] are mostly recovered but not entirely by new firms.”
On the negative side, participation in the labor market has remained stagnant, although participation rates have stopped their post-recession free-fall. Similarly, wages are not showing signs of progress.
“Something we would need for a really strong labor market [is] high compensation growth. That we’re not seeing.....This is an area where there’s still margins of recovery,” Groshen said.
A report by Policy Matters Ohio showed that wage stagnation is a longstanding part of Ohio’s economic landscape, particularly for the bottom 99% of workers. From 1979 to 2011, the income of the bottom 99% has decreased by 7% while the top 1% have seen a 70% growth increase, allowing inequality to fester.
In addition to giving economic prognoses, Groshen detailed the ways in which the BLS provides a service to society.
"Data are a public good like roads and clean air,” she said.
The statistics the BLS provide permit citizens to be informed economic actors. “It’s all about helping Americans make decision because good decisions require good information,” Groshen said.
While economic forecasts may change, Groshen said that the BLS is an enduring and essential institution for American society.
“Data is the lifeblood of democracy and free markets.” she said.
