Did Mass. unemployment really increase?

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    Did Mass. unemployment really increase?

    The Globe recently reported that Massachusetts unemployment had "increased." Really? [ David C. Denison, Mass. unemployment rate rises in July as employers add 1,600 jobs, Boston Globe, August 16, 2012, at http://www.boston.com/businessupdates/2012/08/16/mass-unemployment-rate-rises-july-employers-add-jobs/4HhO7Vux5SqAek2NviYItO/story.html ]

    The poor Globe reporter's article was bombed with comments directed at a month-to-month "increase" in the rate: only one-tenth of one percent. Pretty clearly, neither the reporter nor most of the commenters understood that such a small change in a state rate is only statistical noise.

    To be statistically significant at 95% confidence, a month-to-month change in Massachusetts unemployment has to be at least 0.9 percentage points. [ 1.68 times the 90-percent confidence interval, from the U.S. Bureau of Labor Statistics, 2008, at http://www.census.gov/hhes/www/laborfor/tables/table5.xls ]

    Google has a time-series chart of data for Massachusetts that puts recent news in perspective. [ at http://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&idim=state:ST250000&fdim_y=seasonality:S&dl=en&hl=en&q=massachusetts+unemployment+rate ]

    The Massachusetts Executive Office of Labor and Workforce Development also has the most recent 13 months of the state's unemployment rate on display. [ at http://www.mass.gov/lwd/economic-data/ ]

    Google's 22-year time chart through May, 2012, derived from the U.S. Bureau of Labor Statistics, shows that Massachusetts unemployment has decreased fairly steadily since early 2010. The state's peak unemployment near the end of 2009 was slightly less than the peak near the end of 1992, in the last severe recession.

    The state's chart through July, 2012, shows the state's unemployment rate flattened out during the spring and summer at just over 6 percent. However, the long-term Google chart shows that similar bumps and stalls have been common during the state's recoveries from recent recessions.

    So while we would like to see the state's unemployment in the band of 3 to 6 percent we enjoyed from 1995 through 2008, trends are fairly clearly headed in that direction and look likely to enter the territory by late in the year.

     
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    Is Massachusetts out-of-step?

    Yes, Massachusetts is out-of-step with national trends in unemployment. For all the recessions since 1970, recovery of employment in Massachusetts has outpaced national recovery. As with the state's unemployment trends, Google provides helpful information on national unemployment trends--back to 1947. [ at http://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&idim=country:US&fdim_y=seasonality:S&dl=en&hl=en&q=unemployment ]

    Since the end of the 1960s, the U.S. has suffered a recession about once a decade. By those measures, the 2009 recession was about on-schedule. Measured by peak unemployment, that was the second-worst recession since the Great Depression; the double-hit recession of 1980-1983 was worse. Recovery of employment from the recent recession is a little slower than from that one, thirty years ago, but it has about the same pace as recovery from the recessions of 1970, 1974 and 1991 and is faster than recovery from the recession of 2001.

    Capacities of politicians to affect recoveries look negligible. Former Pres. Reagan did almost nothing in the early 1980s, yet recovery in employment from the recession of that era was as fast as for any recession since World War II. Pres. Obama, with help from Congress for two years, opened floodgates to stem unemployment from the recent recession, yet the rate of recovery in employment has been only about average.

     
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