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Ohio’s unemployment rate edged up in July for the first time this year to 5.7 percent from 5.5 percent in June as employers statewide shed 12,400 jobs, the Ohio Department of Job and Family Services reported Friday.
Ohio’s jobless rate remains lower than the national rate, which inched up 6.2 percent last month from 6.1 percent in June, and is down sharply from the state rate a year ago of 7.5 percent.
But most of the decline in Ohio’s unemployment rate over the past 12 months can be attributed to a continuing decline in labor force participation, or the number of Ohioans working or actively seeking work.
Last month, 6,000 Ohioans retired, went back to school or became discouraged and dropped out of the labor force, continuing a long-term trend that has shrunk Ohio’s workforce to 5,715,000 — its lowest level since August 1997, state jobs data shows.
A shrinking labor force puts downward pressure on the unemployment rate because people who drop out are not counted among the unemployed, even though they don’t have jobs, explained Bill LaFayette, a labor economist and owner of Columbus-based Regionomics, an economics consulting firm.
The number of Ohioans counted as unemployed has declined by 110,000 in the past 12 months, according to the state jobs report.
“If labor force had not fallen over the last year, our unemployment rate would not be 5.7 percent, it would be 6.6 percent,” LaFayette said. “That’s the kind of impact a declining labor force can have.”
But the unemployment rate inched up last month because all the major employment indicators, including labor force participation, moved in the wrong direction, according to Hannah Halbert, workforce researcher with Policy Matters Ohio.
The total number of employed Ohioans declined by 13,000 in July, while unemployment rose 7,000 and the labor force continued to shrink.
“Ohio has made gains since the end of the 2007 recession, but we are nowhere near recovery,” said Halbert, who noted that while the state has added 24,400 nonfarm jobs in the past year, hiring has been neither sustained nor robust.
“July job losses erase nearly all the gains Ohio has made since March,” Halbert said. “Ohio has not sustained even a three-month job growth streak since last summer.”
Ohio employers in most industries reported significant losses last month, including professional and business services, which shed 4,200 jobs. The educational and health services industries lost 3,700 positions, while leisure and hospitality was down 2,900. Manufacturing also showed a net loss of 2,900 jobs.
Even employment gains in local government, which added 6,900 positions, were mostly offset by losses in state and federal government employment, which declined by a combined 5,400 jobs.
Still, LaFayette was quick to point out that the July job numbers, which were based on revised June numbers, are preliminary and subject to revision.
“We’re seeing the same kind of slowdown now in these new estimates that we saw in the preliminary estimates last year, which were eventually revised up,” he said. “I’m thinking that these numbers may not be real, and employment growth could actually be better than what the numbers are showing.”
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