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Making Sense of Massachusetts Unemployment Numbers

Posted on July 22, 2011

Massachusetts employers created 10,400 jobs during June, but the unemployment rate remained unchanged at 7.6 percent.

UnemploymentThe commonwealth lost 4,100 jobs in May, while unemployment declined by two-tenths of a percent – the same rate drop we saw in April when Massachusetts posted a record monthly employment gain of 20,300.

What’s going on? How can we make sense of these numbers? Is the economy improving or not?

The unemployment rate tells us relatively little about how the economy is doing month to month – even though high unemployment may well be the single greatest economic concern today. That’s because it’s a product of two factors: the number of people with jobs, and the number of people in the workforce. We actually learn much more by looking at each factor separately than we do by combining them.

A gain of 26,000 jobs in Massachusetts over the past three months is good news. That total, with the substantial addition in June, tells us that despite a falloff in economic growth, jobs are being created in our state, and at a pace sufficient to restore employment to pre-recession levels over time. (The message from national results is less positive.)

What is not good news is the workforce side, up only 15,000 since the bottom of the downturn in October 2009. This is a matter of participation rates more than population growth. The job market is much better than it was, but has not improved enough to draw potential workers to seek employment. There are too many people – and some would say too many employers as well – sitting on the sidelines. Real, sustained progress will depend on getting everyone back in the game.

At 7.6 percent for two consecutive months, the Massachusetts unemployment remains well below the 9.2 percent national rate. Both the unemployment rate and the number of unemployed residents are the lowest since February of 2009.

Six of the ten private sectors added jobs in June with the largest over-the-month gains in manufacturing followed by: construction; professional, scientific and business services; leisure and hospitality; financial activities; and educational and health services. June’s monthly gain follows a revised May monthly loss of 4,100 jobs statewide and a 1,300 job loss in the private sector.