Worcester Economy Stuck In Neutral
Thursday, October 04, 2012
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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