Scrutinizing labor trends

When the state government reported a few days ago that the August unemployment rate in Reno fell to 3.9 percent from 4.2 percent a year earlier, many northern Nevada businesspeople looked for meaningful direction in the statistics.

The economists who pull the figures together for the Nevada Department of Employment,Training and Rehabilitation say the figures are useful to see trends, but they caution about reading too much into the figures of a single month.

"We worry more about the trend than we do any one month," said Joe Shabi, an economist with the state employment department.

In an interview a few days ago, Shabi explained how the state calculates the unemployment rate it reports monthly and he pointed out the pitfalls in relying on the data.

The unemployment figures reported by the state each month include two elements a report on the labor force, and an industry-by-industry breakdown of jobs.

They're not, Shabi explained, calculated in the same way.

The labor force figures the statistics that include the widely reported unemployment rate for each month are determined by the U.S.

Census Bureau.

About 1,300 households in Nevada are included in the national sample of 50,000 to 60,000 households surveyed by the Census Bureau each month.

Each household is included in the sample for four months, dropped from the sample for eight months, then returned to the sample for another four months.

(This allows for good year-over-year comparisons because exactly the same group of households is surveyed.) When the Census Bureau calls, it asks how many are in the household, how many are working and how many are looking for work.

The survey always is done in the week that includes the 12th of each month.

Why that week? It's less likely to be influenced by holidays July 4, Dec.

25 and the like.

The results look like this: For August, the unemployment rate in Washoe County was reported to be 3.9 percent.

That meant that an estimated 7,700 people in the county were out of work and looking for jobs, and the total labor force both working and looking for work was estimated at 196,900.

The industry-by-industry estimates of employment, meanwhile, are based on an entirely different statistical method, Shabi said.

Those figures are compiled from a voluntary sample of about 4 percent of the nation's employers.

But they're skewed a little because the 4 percent of the employers who respond to the survey represent include more large employers than small employers.

In fact, that 4 percent reflects about a third of the employment in the country.

The results of that survey look like this: In August, the construction industry in Washoe County was estimated to employ 17,600 people, up by 700 from the same month a year earlier.

Employment in the leisure and hospitality industry was estimated at 41,300, up by about 300 from the previous year.

In all, employment in about 20 segments of the economy is detailed.

But the July industry-by-industry figures estimate that 200,800 people were working in Washoe County 3,900 more than estimated in the labor force figures.

What gives? Along with the differences in the way that the figures are compiled, Shabi noted that the labor force figure is based on where people live.

The industry-by-industry figure, meanwhile, is based on where they work.

In a place where people commonly commute across county lines to go to work, differences aren't surprising.

Then, too, the figures don't account for people who hold more than one job.

They show up once in the labor force figure, but each of their jobs is counted separately in the industry-by-industry figures.

Shabi cautioned, too, against placing too much stock in month-by-month variations in the figures.

(The Washoe County unemployment rate of 3.9 percent in August , for instance, compared with 4.2 percent in July.) If nothing else, the change in survey group every four months can result in a bump in the jobless rate.

Then, too, he said the survey techniques appear to be slow to record sharp turns in the economy such as the dramatic number of layoffs following the Sept.

11 attacks.

Today, he wonders if another turn in the economy has been reflected yet in the state's jobless numbers.

"I think we're getting faster growth than what we're catching in the surveys," he said.

The unemployment figures are updated, however, once the Department of Employment,Training and Rehabilitation gets unemployment insurance reports.

"That's the best data," Shabi said, because it includes job-by-job reports from about 90 percent of the state's employers.

Although the information so late that it doesn't provide much use to folks looking for current figures, it allows economists to revise the unemployment statistics used to make year-to-year comparisons.

(To take a look at state unemployment reports, both the current statistics as well as historic data, go to http://detr.state.nv.us/)