Official U3 unemployment rose slightly in Archuleta County, from 8.9 percent during September to 9 percent in October, according to a report released last week by the Colorado Department of Labor and Employment.
The so-called official U3 number represents first-time unemployment claims added in with ongoing claims for unemployment insurance.
Neither the CDLE nor the Bureau of Labor Statistics (BLS) reports the U6 unemployment rate at the county level — an alternative measure which counts part-time workers desiring full-time work, along with numbers of unemployed workers too discouraged to have looked for jobs. As such, October’s U3 9 percent unemployment number may only represent a portion of actual unemployed (or marginally employed) workers in the county.
While a rise of 1/10th of 1 percent in local unemployment is hardly good news, it is news that has been much worse in previous years as, with few exceptions, October unemployment has increased from September numbers.
Since 1976 (when the BLS began collecting reliable data for local unemployment), the fourth quarter of one year, going into the first quarter of the following year, have been the roughest period for unemployment in the county. What that means is that during the past 34 years, the period of October through April has shown the highest unemployment numbers in the county, with the late spring through the late summer months being the most robust period for employment.
In fact, October has been, in 20 out of the past 34 years, a precursor for the lean winter months that show a marked increase in unemployment countywide — numbers that spike in February or March, traditionally the worst months for unemployment in the county. During the past 34 years, October has averaged a .41 percent increase in unemployment relative to September.
Yet, while October usually marks the beginning of the time of year when unemployment rises significantly, the state of unemployment (or the amount of increase or decrease) has not historically provided an indication of how the following months will shape up: a “good” October (one that has performed better than the previous month) does not statistically indicate a lower rise in unemployment over the winter.
December, on the other hand, tends to be a more accurate indicator for how unemployment in the first quarter of the following year will pan out: with few exceptions, over the past 34 years, a significant jump in December unemployment (from October and November) portends a continued increase in those numbers during the next three to four months. Conversely, no increase or just a slight rise in December’s unemployment numbers has, historically, indicated that January through April unemployment will remain relatively stable.
What this means is that while October’s slight increase in unemployment is better news than in many previous Octobers, it is too early to tell how the rest of the winter will perform as far as the local jobs situation.
Furthermore, the current jobless situation is obviously in dire need of improvement. 2009 finished with a yearly average of 8 percent unemployment for the county, the worst unemployment numbers since 1992. At an average 9.5 percent for the first 10 months of this year, 2010 is on track for the worst unemployment situation in the county since 1986 (which had a 10.3 percent average).
With national unemployment above 9.5 percent for the 15th straight month, the U.S. faces a situation similar to Archuleta County: sustained high unemployment leading to decreased consumer spending (which accounts for accounts for about 70 percent of economic activity, nationally), the direct impact being slower economic growth.
Unfortunately, with less economic growth and the resulting fewer hires by businesses, a vicious circle is created.
As of Tuesday night, over 800,000 Americans lost their unemployment benefits, with as many as over 2 million expected to also be without benefits by the end of this month. Although Senate Finance Committee Chairman Max Baucus (D-MT) introduced a bill on Monday to extend benefits through 2011, that bill is expected to face stiff opposition and may not see a vote until after the end of the lame duck session.
However, many analysts argue that an extension of those benefits could be the best way to prop up an economy that shows little sign of recovery.
According to a recent Labor Department report, for every dollar spent on unemployment insurance, two dollars are reinvested into the economy. In a report released by the nonpartisan Congressional Budget Office (CBO), a benefits extension provides the most immediate economic heft for the economy as the unemployed purchase items locally to meet needs.
Opposition to the extension of benefits largely rests on the fact that extended benefits are unfunded and add to the federal deficit. However, those same opponents almost unanimously support tax cuts for Americans making over $250,000 a year — also not funded by the federal budget and adding to the deficit.
However, while the extension of unemployment benefits for one year is estimated to come at a cost of $56.4 billion, extending tax cuts for higher tax brackets is expected to add over $700 billion to the deficit.
Supporters of the tax cut extension argue that the less than 3 percent of the taxpayers who would receive the top tax bracket cuts actually have some business income. Yet, a report by the Brookings Institute (an independent public policy organization) revealed that the vast majority of those “small businesses” are largely K Street lobbyists, partners in large corporate law firms, high-powered consultants, Wall Street bond traders, hedge fund managers, doctors and surgeons, and those among the country’s wealthiest millionaires.
According to Moody’s Analytics, Inc., a tax cut for America’s wealthiest is more likely bound for a savings account than circulated into the economy. That finding was supported by the CBO report which stated, “policies that would temporarily increase the after-tax income of people with relatively high income... would have smaller effects because such tax cuts would probably not affect the recipients’ spending significantly.”
In fact, the CBO determined that a cut in employer payroll taxes on businesses that actually increase their workforce would have six to eight times as much job-creating impact as an income tax cut.
The CBO estimated that further infrastructure investment would also do more to help the economy and mitigate high unemployment than an extension on tax cuts for high-income earners.
While many residents of Archuleta County will face an uncertain (and dour) future as unemployment benefits expire, history shows that the unemployment situation in the county has been much worse. That same history has shown that only successful economic development (and the accompanying investment in infrastructure) has led the area to better economic times — and lower unemployment.