Monday, January 19, 2009

Who Cares About Unemployment?

Obviously, a lot of people, and not just those that are unemployed. But is the unemployment rate a good measure of how a local economy is doing?

Here is a chart of year over year employment change and the unemployment rate for McAllen, Texas:


(Click on chart for a larger version in a new window)

In January, 1999 the unemployment rate was pushing 20%, but between January, 1998 and January, 1999 the local economy added nearly 5,000 jobs. In fact, McAllen has added jobs in every year over year period for more than 10 years, during which time the unemployment rate never dipped below 5%. It seems pretty clear employment can be increasing despite a relatively high employment rate. And, I would argue the change in employment is a better indicator of an area’s financial health than it’s unemployment rate.

Data from BLS Local Area Unemployment Statistics