All Labor Markets are Local

Categories: Commentary |

March 23, 2015

This week, we examine recently released county-level employment data and identify counties that are not participating in the reported national trend.

Labor Markets are Improving, But Strength in Local Markets Varies

In its post-meeting statement this week, the Federal Open Market Committee (FOMC) described its opinion of the current state of US labor markets:

“A range of labor market indicators suggests that underutilization of labor resources continues to diminish.

The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate.”

According to the forecasts of Board Members and Regional Bank Presidents, the FOMC expects the labor market to continue improving, but at a slower pace than in recent years:


Source: Board of Governors of the Federal Reserve System

While this is good news for the national economy, and municipal bond investments in general, investors in municipal bonds also need to monitor the health of labor markets at the State and local level.

The map below illustrates the wide range of Unemployment Rates by county across the nation.  While Mountrail, North Dakota (1.5%); Perkins, Nebraska (1.5%); Issaquena, Mississippi (24.5%); and Wade Hampton, Alaska (24.5%) are obviously outliers, as the map shows, there is wide dispersion of Unemployment Rates regionally and within States.

03-23-15 2

Last week, the Bureau of Labor Statistics released updates to several sets of State and county employments statistics.  This release included the first of two benchmark revisions with updates to data sets extending back several years; the second stage of the benchmark revision will be implemented in April of this year.

Using the DIVER Analytics Filter Module, we can identify counties with particularly weak labor markets.  Using the Filter, we find that 563 counties (out of 3,223) have Unemployment Rates that are higher now than they were a year ago; 430 of these have also seen declines in Labor Force over the same period; and 40 of these are in the 1st quartile by size.

03-23-15 3

Source:  BLS, DIVER Analytics Filter Module

Data for the 40 counties with the largest reduction in labor force is shown below. In comparison, nationally the labor force grew by just over 1%. 

03-23-15 4

Source:  BLS, DIVER Analytics Filter Module, DIVER Data Solutions

A look at some of these counties in a line chart illustrates how slowly labor force numbers evolve.  An interesting exception is Cape May, New Jersey, which is located just south of Atlantic City on the ocean, which displays dramatic seasonality in its Labor Force.

 03-23-15 5


Have a great week,  

Michael Craft, CFA


CLICK HERE to Subscribe to the Weekly Commentary

For more information, please contact:

Learn more about Lumesis

Learn more about DIVER Solutions