Regional employment growth could slow further without boosting the unemployment rate, says Cleveland Fed economist
Employment growth is slowing, and even reversing, in some states, including those in the region served by the Federal Reserve Bank of Cleveland—Ohio, Kentucky, Pennsylvania, and West Virginia. How low can regional employment growth go without boosting the unemployment rate?
According to Hal Martin, a Cleveland Fed policy economist, the answer depends on several factors, including growth in a state’s working-age population, net in-migration to a state, and labor force participation. He notes, for example, that Ohio experienced more workers moving out than moving in from 2000 through 2015, while Kentucky and West Virginia have had intervals of both positive and negative net in-migration.
Examining five scenarios, Martin shows that varying the assumptions about the labor force participation rate and migration trends offers different levels of employment growth that correspond to a steady unemployment rate. “Comparing these estimates to the (Cleveland Fed) District’s November 2016 employment growth rate of 0.8 percent per year, we see that employment growth has been notably above the level required to hold the unemployment rate steady under reasonable assumptions,” says Martin. “And under reasonable assumptions, District employment growth could slow further without boosting the unemployment rate.”
Martin says states in the Cleveland Fed’s District can accommodate lower employment growth than the rest of the country primarily because of their lower population growth.
Federal Reserve Bank of Cleveland
The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.
The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.
Doug Campbell, firstname.lastname@example.org, 513.455.4479