More DC residents are working, but resident employment growth has not kept up with that of the labor force
According to the US Bureau of Labor Statistics (BLS), unemployment in the District of Columbia has been rising over the past six months. Seasonally adjusted unemployment rose from 22,376 in January 2017 to 25,706 in July 2017, an increase of 3,330 (14.9%). The rate of unemployment rose from 5.7% in February to 6.4% in July.
The rise in unemployment does not mean, however, that the number of employed DC residents fell. To the contrary, there were 4,313 (1.2%) more DC residents working in July 2017 than there were in January. Unemployment rose because for the past 6 months the increase in jobs for DC residents did not keep up with the even faster growth in the DC labor force.
As explained below, unemployment can be viewed as the difference between the labor force and resident employment. Unemployment goes down if resident employment increases more than the labor force. This is what happened from July 2016 to January 2017. At that time unemployment decreased by 1,324, following the trend of the prior two years. Unemployment goes up if resident employment increases less than the labor force. This is what happened from January 2017 to July 2017 when the labor force increased more than twice as much as in the prior 6 months, and unemployment rose by 3,330.
Unemployment is defined by BLS as people without jobs who are looking for work. This is calculated each month based on a monthly survey of a sample of households. The survey also counts people who are working. The labor force is then estimated by adding together the number working and the number who are unemployed. Unemployment can therefore be viewed as the difference between the labor force and resident employment, and the unemployment rate expresses unemployment as a percentage of the labor force.
The following charts and table show that for most of the past 3 years DC’s resident employment has grown faster than the labor force, with the consequence that unemployment and the unemployment rate steadily declined. The data does not explain why unemployment has started to rise in recent months. The reasons the labor force can grow more than resident employment include arrival in the city of more workers looking for jobs and existing residents returning to the labor force because of improving prospects of finding work. Whatever the reasons, DC’s unemployment rate over the past 6 months rose from 5.7% to 6.4% as the US rate was falling from 4.8% to 4.3%.
About the data. The data discussed here are labor force statistics prepared each month for the US and the states by the US Bureau of Labor Statistics (BLS). The data are derived from household surveys, and are subject to sampling and reporting errors as well as changes in underlying demographic information that is taken into account by BLS in making the estimates. In practice, labor force is constructed by adding together those who say they are working and those who say they are unemployed (this is, not working but looking for work). All calculations are from seasonally adjusted data. The data reflect revisions to the original July 2017 estimates made by BLS in its August report, but the data are also subject to further revision by BLS. Seasonal adjustment is the method BLS uses for removing seasonal elements (such as school graduates seeking to enter the labor force or holiday period fluctuations) from monthly labor market statistics. This is done to reveal underlying trends and cycles in the data.
A version of this blog appeared in the September 2017 OCFO report District of Columbia Economic and Revenue Trends.