(Janesville) By Jim Leute, email@example.com
Rock County's official unemployment rate reached a four-year low in October, but whether that's cause for celebration remains to be seen.
The state's Department of Workforce Development reported last week that the Janesville Metropolitan Statistical Area—which includes all of Rock County—had an October unemployment rate of 7.1 percent.
That's still the highest of any of Wisconsin's 12 statistical areas. Within the local area, Janesville posted an unemployment rate of 7.8 percent, while Beloit was at 9.2 percent, the sixth- and second-highest ranked cities in the state, respectively.
The local area's rate, however, is down from the 7.9 percent posted in September and a significant improvement over October 2011, when the area unemployment rate was 8.4 percent.
"I was very surprised by those numbers," said Bob Borremans, executive director of the Southwest Wisconsin Workforce Development Board. "Things are improving locally, but have they improved to the level indicated by that number? I'm not ready to say that."
This year opened with local unemployment above 9 percent. Ever since, the state has reported lower rates that could be considered the start of a trend.
The unemployment rate, however, is just one factor in an area's overall employment equation, Borremans said.
At its most basic level, it is the number of jobless people expressed as a percentage of the total labor force.
When it drops, it's a common misconception that the overall employment picture must be getting better.
That assumes, however, that the area's labor pool—the number of people working or looking for work—is unchanged.
In the Janesville area, the labor force has decreased every year since 2006.
Since October 2008—the last time the local unemployment rate was below 7 percent—the labor force has dropped by 6.1 percent while the number of people employed declined by 7.3 percent.
Put that all together and the bottom line in Rock County is that fewer people are working at fewer jobs, Borremans said.
"I think there are still people who are frustrated and not actively looking for work and therefore not counted in official unemployment numbers," he said. "The fact is that the labor force has dropped, and when you compare that number now to a few years ago, you see that there are fewer people looking for work.
"I think it's more a reflection of people not actively looking for work than a sign of any remarkable recovery."
Still, Borremans doesn't dismiss positive movement in the local unemployment rate
"There are signs that things are picking up, that more jobs are being created locally," he said.
The state reported that Rock County added 900 jobs between September and October.
Borremans' organization collects jobs data for Rock, Green, Lafayette, Iowa, Richland and Grant counties. For the first nine months of this year, job postings are nearly 79 percent ahead of those in the first three quarters of 2011, according to data provider WANTED Analytics.
For the second and third quarters of this year, nearly 70 percent of those postings came from Rock County employers.
More than halfway through the fourth quarter, that activity continues, Borremans said, noting that businesses still are using the Rock County Job Center for recruitment events and job interviews.
"That's a positive," he said. "I think we're heading in the right direction, but nowhere near the dramatic shift indicated in the unemployment rate."
Borremans said he would not be surprised to see short-term increases in the local unemployment rate.
He suspects the October number was driven down by people holding off on job searches while elections played out.
The state also reported last week that unemployment rates improved in nearly every statistical area, city and county in Wisconsin.
That was true for Rock County's neighbors.
Walworth County's rate improved to 5.7 percent, while Jefferson County's dropped to 5.8 percent, Green County's declined to 5 percent and Dane County's dipped to 4 percent.
WHAT IS THE UNEMPLOYMENT RATE?
At its most basic level, an area's unemployment rate is the number of jobless people expressed as a percentage of the total labor force.
Each month, it's calculated for a variety of geographic areas, including Metropolitan Statistical Areas such as Janesville. The U.S. Census Bureau contacts households nationwide as part of its Current Population Survey. The bureau asks a series of questions to determine the employment status of people in the household.
That data is fed into a report called the "The Employment Situation," which is published each month and includes a table that lists six measures of unemployment. The most conservative measure is U-1, and the most liberal is U-6.
The official unemployment rate for any given geographical area is U-3, which falls near the middle of the continuum.
Like other economic statistics, the rates are based on statistics from a relatively small sample and, therefore, are not exact.
For purposes of the official unemployment rate, respondents are lumped into three basic categories based on their answers to the survey questions.
The U.S. Department of Labor, through its Bureau of Labor Statistics, is responsible for calculating and publishing the monthly rate with input from state agencies.
The categories are:
Labor force: This includes working people 16 and older and those who are unemployed and looking for work.
If someone is neither working nor looking for work, they are not in the labor force.
Unemployed: These are people who don't have a job, are available for work and have tried in the last four weeks to get a job.
Despite popular opinion, the government does not define unemployment by whether someone is receiving weekly unemployment compensation.
In fact, the federal survey does not include a question about unemployment insurance benefits.
Employed: People who worked at least one hour for pay somewhere or for 15 unpaid hours in a family-run business.
The official unemployment rate is then calculated by dividing the number of unemployed by the labor force. It is expressed as a percentage.