Rise in Washington area unemployment seen as good sign for economy's recovery
Thursday, March 11, 2010
Unemployment rates rose in the District, Maryland and Virginia in January, a shift that economists said could be a positive sign for the economy because it suggests that discouraged job-seekers are feeling more optimistic about their prospects and have resumed looking for work.
The District's jobless rate increased to 12 percent in January from 11.9 percent the previous month, according to data released Wednesday by the federal Bureau of Labor Statistics. Maryland's rate climbed to 7.5 percent from 7.4 percent, while in Virginia, the jobless rate rose to 6.9 percent from 6.8 percent. That same month, the U.S. unemployment rate dropped to 9.7 percent from 10 percent in December.
"Maryland, Virginia and the District are where the labor market is advanced in terms of recovery. Many people are beginning their job search, and as they begin, that rate gets higher," said Anirban Basu, chairman and chief executive of Sage Policy Group, a Baltimore economic and policy consulting firm.
The Bureau of Labor Statistics, which revised the District's December rate down by 0.2 percentage points and the rates in Maryland and Virginia down by 0.1 points, counts only people working or actively looking for work as being in the labor force.
Rising unemployment as a positive sign may sound counterintuitive, but economists explain it this way: The increase suggests that long-term unemployed people in the D.C. area who had given up looking for work have restarted their job hunt, perhaps because they see evidence that the region's economy is improving and that employers are beginning to hire again. On the other hand, the declining national rate indicates that discouraged workers elsewhere have remained out of the labor force because they do not see any reason to look for work.
"You do have people coming back thinking things are loosening up and they might get something," said Ann D. Lang, senior economist at the Virginia Employment Commission. She said the state's labor force grew by 30,000 in January, even though the number of unemployed people rose and the number of employed declined.
Officials in the District and in Maryland say they also are seeing early signs of recovery in the job market.
The District experienced the nation's largest monthly increase -- 1 percent -- in the number of jobs, according to the federal data. That represents the addition of 6,700 jobs, mainly in the federal government, according to the city's Department of Employment Services.
Officials at the agency say the city's labor force grew by 3,300 from January 2009 to January 2010, and they are seeing more job postings and job fairs held by large employers, including Safeway and Pepco.
"It's a sign of economic recovery: People are coming back into the labor market looking for jobs," said agency Director Joseph P. Walsh Jr. As they return, he added, "they are counted brand new in the unemployment rate."
A study released Tuesday by Manpower suggests that the Washington region will have one of the strongest job markets in the nation, with hiring picking up substantially in the second quarter.
Asked about their hiring plans, 23 percent of D.C. area employers surveyed said they plan to increase staff in the second quarter, compared with 14 percent who said so in the first quarter. Only 3 percent said they plan to cut staff in the second quarter, compared with 9 percent in the first quarter. The share of employers who are planning no changes in their staff levels -- 73 percent -- was the same in the first and second quarters.
"Perhaps people who dipped their foot in the hiring waters didn't [suffer] and will continue in the hiring pace," said Tim Namie, Manpower's managing director.
Maryland's labor force grew by 1,400 in January, the first increase since May 2008, state officials said. The number of unemployed people rose by 5,100, but the number of people who lost their jobs totaled 3,700. State officials speculate that the balance of 1,400 were workers reentering the labor force.
"If we have any optimism we've got to keep it tempered, because it is a modest increase -- but it's a step in the right direction," said Tim Bibo Jr., research analyst at the Maryland Governor's Workforce Investment Board.