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Worcester Economy Stuck In Neutral

Thursday, October 04, 2012


The Worcester area's unemployment rate was down in August compared to last year, but the decrease was due largely to job-seekers exiting the labor market rather than increased hiring among local businesses.

According to a Bureau of Labor Statistics report released Wednesday, unemployment in the Worcester metro decreased by 0.7 percent ober the past 12 months, from 7.8 percent in August 2011 to 7.1 percent in the same month this year.

The number of people unemployed people in the civilian labor force decreased by 2,300 from 2011 to 2012, but the total size of the labor force decreased by 2,000 from 296,200 to 294,200 people as well, indicating a net gain of only around 300 jobs in the region during the past year. UMass Memorial's recent announcement of the layoffs of 140 of the full-time employees in the coming months will reduce that number even further.

An Unemployment Crisis

"The unemployment picture looks crazy," said Bryan Engelhardt, an assistant professor of Economics at the College of the Holy Cross.

"The duration of unemployment is the thing I'm really concerned about as a labor economist."

Engelhardt said that, at 40 to 45 weeks, not only is the average period of unemployment twice as high as the normal 15 to 20 weeks, it is nearly 50 percent higher than it has ever been previously.

"We have an unemployment crisis."

Engelhardt said this unemployment crisis seems to have divided the population into two segments. One segment is still in line with typical unemployment and hiring cycles, while the other has faced a hiring market unprecedented in its bleakness.

"They simply cannot find a job."

Leaving the Labor Market

Education and job skills are often key factors in determining which segment a potential job-seeker falls into. For many newly-unemployed, it may be the first time they are entering the job market in a decade or more, and a lack of up-to-date training could keep them out of work for longer than they would like.

"We still see a lot of people that have been unemployed for the longer-term really struggling to reenter the job market, said Jeffrey Turgeon, Executive Director of the Central Massachusetts Workforce Investment Board, a public-private partnership serving both employers and employees to increase job readiness and skills among the region's workforce.

Turgeon said that the majority of people he has seen exit the local labor market recently have done so involuntarily, succumbing to early retirement after years-long job searches proved fruitless.

While it often takes a few years for unemployment rates to return to healthy rates following an economic crisis, the current recession is proving to be an exception.

"This is really unusual," said Engelhardt.

"If you look at the number of job openings, those vacancy rates have fallen drastically."

Hiring Still Far Off

Worcester Regional Chamber of Commerce President Dick Kennedy said he did not expect the hiring situation to change anytime soon, so long as the tax and regulatory uncertainty the region's businesses face persists.

"You're just going to see people making due with what they've got. That's been the case for months," he said.

"The attitude is basically kind of wait and see."

With the Affordable Care Act being implemented in stages through 2014 and the tax breaks set to expire at the end of this year still in limbo, Kennedy said businesses are unable to do the type of long-term planning that hiring and expansion require.

"One of the best indications we'll have is, after the election's over, how serious people get in Washington about solving this problem and about using some of the vehicles at their disposal to get us moving in the right direction."


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Iron Mike Farquhar

As long as Massachusetts Lemmings continue to vote 'D' cycle-after-cycle, there will be no new jobs created in this once-proud manufacturing state.

The new brand of liberals don't like manufacturing. They look at a factory as something to regulate severely and tax excessively.

They are more focused on 'clean air' and 'open spaces' – than on working families actually having steady paying jobs. So the jobs are in China, and the factories and mills are empty – along with a lot of storefronts.

And there are STILL Taxacrats on Beacon Hill who want to raise our state income tax to 6%!

Christopher Horton

" 'The unemployment picture looks crazy,' said Engelhardt, and at 40 to 45 weeks, not only is the average period of unemployment ... is nearly 50 percent higher than it has ever been previously."

[And then folks give up, because looking every day and being rejected every day is not only hard work, it hurts. A lot. And there's just so much of that you can take.]

" ... 'this unemployment crisis seems to have divided the population into two segments. One segment is still in line with typical unemployment and hiring cycles, while the other has faced a hiring market unprecedented in its bleakness.'

" 'They simply cannot find a job.' "

That's exactly what we're seeing out here. There are the folks who can still get jobs, fairly easily. Their pay may be down, they may face more abuse on the job because they're more replaceable but they believe they could get another job in a minute, and that the long-term unemployed are just loafers and bellyachers who need a good stiff kick in the butt to get them off the couch and out looking.

And then there are large numbers who simply cannot find a job, and their experience is that there's just nothing out there.

To get a job these days you basically have to know someone. If you don't, you have to be squeaky clean, not too old, no marks against you. Half the adult population in Massachusetts has a CORI report. Anyone who's been out of work for six months, that gets counted against them, plus they now have credit history problems. If you're over 55, Black or a Spanish speaker, if you're young with no work history or you've got any kind of a disability, that's counted against you. With hundreds of applications for any good job, employers can afford to be super picky.

What I'd ask of you all out there is to understand that this unemployment disaster includes you too. Don't blame the unemployed or believe you're still working because you're a better person. We need to support each other and work together to change the policies and lies that got us into this situation, or we're all going down together. That unemployed worker who's about to lose his or her benefits and home is not earning the money to buy what you're making - which is why, when the next round of this crisis hits, you're next.

Christopher Horton

7.1% of 294,200 is 20,888 Worcester Metro residents officially counted as unemployed according to the Bureau of Labor Statistics U-3 rate, which uses a very narrow definition of unemployment. The BLS U-6 rate for unemployment and involuntary underemployment, was 14.7% nationally in July (the most recent figure published), which is 81% higher than the "official" rate. If we assume the undercount in Worcester is similar and scale up the unemployment rate by 81% we get 14.7% unemployment, or about 38,000 unemployed Worcester-area residents.

Our guess (at the Worcester Unemployment Action Group and the Grace Team) is that if you add long term discouraged workers to this we have about a 22% unemployment rate in the Worcester area, or about 65,000 unemployed Worcester area residents.

I'll go into how we calculated that when I comment on the September unemployment figures that are due to be released tomorrow.

Christopher Horton

Correction. U-6-based estimate, 12.9% or about 38,000; with long term discouraged workers, 20% or about 60,000.

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