Economic Summit XITHE VIRGINIA AND ROANOKE VALLEY LABOR MARKETS
ALICE LOUISE KASSENS, PHD
JOHN S. SHANNON PROFESSOR OF ECONOMICS
ROANOKE COLLEGE
Outline
A look at the Commonwealth’s economyA look at the local economyFuture labor market in Roanoke
The Commonwealth’s Economy
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
January-99
July-99
January-00
July-00
January-01
July-01
January-02
July-02
January-03
July-03
January-04
July-04
January-05
July-05
January-06
July-06
January-07
July-07
January-08
July-08
January-09
July-09
January-10
July-10
January-11
July-11
January-12
July-12
January-13
July-13
January-14
0.58
0.6
0.62
0.64
0.66
0.68
0.7
0.72
0.015
0.025
0.035
0.045
0.055
0.065
0.075
Labor Market Movements in Virginia 1999-2014
lfpr epop urate
Pre-Great Recessionaverage EPOP: 65.9%
Great Recession +average EPOP: 63.8%
Pre-Great Recessionaverage u-rate: 3.3%
Great Recession +average u-rate: 5.9%
Pre-Great Recessionaverage LFPR: 68.2%
Great Recession +average LFPR: 67.8%
The Commonwealth’s Economy
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
LFPR-0.4 ppts.
URATE+2.6 ppts.
EPOP fell by 2.1 percentage points
over the Great Recession and recovery
Prolonged job search
Dropped out of the labor force
The Commonwealth’s Economy
Source: Virginia Employment Commission
March 2014
Supply and demandof labor
Shortage of labor in VA
Surplus in the US
0.87 March 2014
269,379 March 2014
233,871 March 2014
The Commonwealth’s Economy
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013400
500
600
700
800
900
1000
1100
Weekly Wages Over Time, Virginia
Nominal wages Real wages
Wag
es, $
/wee
k
Source: BLS and author’s calculationsNote: Real wages adjusted using CPI for Southeast Region (1996=100); wage values assume work 40 hours per week and every week per year; Q1 wages
Despite labor shortage in VA, realwages are the same in 2013as they were in 2007 (~$675/wk.)
The Commonwealth’s Economy
Data source: U.S. Census Bureau, Center for Economic Studies ; Author’s calculationsNote: No distinction between full-, part-time, or temporary hires; no distinction between voluntary and involuntary separations
Q407Q108
Q208Q308
Q408Q109
Q209Q309
Q409Q110
Q210Q310
Q410Q111
Q211Q311
Q411Q112
Q212Q312
Q412Q113
Q213400000
450000
500000
550000
600000
650000
700000
750000
800000
850000
Separations and Hires, Virginia
Separations Hires
# se
para
tions
, hir
es (`
000)
RecoveryRecessionLabor flows
Cyclical
Match quality
Productivity
The Commonwealth’s Economy
Q407Q108
Q208Q308
Q408Q109
Q209Q309
Q409Q110
Q210Q310
Q410Q111
Q211Q311
Q411Q112
Q212Q312
Q412Q113
Q213400000
450000
500000
550000
600000
650000
700000
750000
800000
850000
Separations and Hires, Virginia
Separations Hires
# se
para
tions
, hir
es (`
000)
RecoveryRecessionLabor flows
Employment grows &unemployment ratefalls when hires exceedseparations
Data source: U.S. Census Bureau, Center for Economic Studies ; Author’s calculationsNote: No distinction between full-, part-time, or temporary hires; no distinction between voluntary and involuntary separations
The Commonwealth’s EconomyMovements along theBeveridge Curve
Changes in Aggregate Demand
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
0.020 0.030 0.040 0.050 0.060 0.070 0.0800.030
0.035
0.040
0.045
0.050
0.055
0.060
0.065
0.070
f(x) = − 0.605599179719158 x + 0.0801604833567952R² = 0.874486656042074
Beveridge Curve during the Great Recession
Unemployment rate
Job
vace
ncy
rate
(JO
/LF)
The Commonwealth’s Economy
“Recovery”
“GreatRecession”
Shifts of theBeveridge Curve
Changes in the matching process
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
0.020 0.030 0.040 0.050 0.060 0.070 0.080 0.0900.030
0.035
0.040
0.045
0.050
0.055
0.060
0.065
0.070
0.075
0.080
f(x) = − 0.689140972179885 x + 0.0988036521269595R² = 0.438054835303045
f(x) = NaN x + NaNR² = 0 Beveridge Curve during the Recovery
Unemployment rate
Job
vace
ncy
rate
(JO
/LF)
The Commonwealth’s Economy
“Recovery”
“GreatRecession”
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
0.020 0.030 0.040 0.050 0.060 0.070 0.080 0.0900.030
0.035
0.040
0.045
0.050
0.055
0.060
0.065
0.070
0.075
0.080
f(x) = − 0.689140972179885 x + 0.0988036521269595R² = 0.438054835303045
f(x) = NaN x + NaNR² = 0 Beveridge Curve during the Recovery
Unemployment rate
Job
vace
ncy
rate
(JO
/LF)
Shifts of theBeveridge Curve
WHY?
Skills mismatch (structuralunemployment)
Federal EUI
The Commonwealth’s Economy
“Recovery”
“GreatRecession”
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
0.020 0.030 0.040 0.050 0.060 0.070 0.080 0.0900.030
0.035
0.040
0.045
0.050
0.055
0.060
0.065
0.070
0.075
0.080
f(x) = − 0.689140972179885 x + 0.0988036521269595R² = 0.438054835303045
f(x) = NaN x + NaNR² = 0 Beveridge Curve during the Recovery
Unemployment rate
Job
vace
ncy
rate
(JO
/LF)
Long run unemployment rate average for Roanoke MSA = 4.4%(1999-2014)
Job opening rate at 4.4% unemployment rate during recession = 5.4%
Job opening rate at 4.4% unemployment rate during recovery = 6.8%
The Commonwealth’s Economy
Q199Q499
Q300Q201
Q102Q402
Q303Q204
Q105Q405
Q306Q207
Q108Q408
Q309Q210
Q111Q411
Q312Q213
Q1140
2000
4000
6000
8000
10000
12000
14000
Initial Unemployment Insurance Claims, Virginia Q1 1999 – Q1 2014
Quarter/Year
# cl
aim
s
Data sources: US Department of Labor ; Author’s calculations
The Commonwealth’s Economy
Data sources: US Department of Labor ; Author’s calculations
Q199Q499
Q300Q201
Q102Q402
Q303Q204
Q105Q405
Q306Q207
Q108Q408
Q309Q210
Q111Q411
Q312Q213
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
Continued Unemployment Insurance Claims, Virginia Q1 1999 – Q1 2014
#cla
ims
The Commonwealth’s Economy
Elementary(0.7%) Some High School
(7%)
High School Grad/GED
(38.5%)
Some College(10.4%)
Associate's Degree(16.8%)
Bachelor's Degree(15.8%)
Post Graduate Degree(6.3%)
Unknown(4.6%)
Education status of March 2013 job ap-plicantsN=10,949
Male = 53.4%Under 22 = 9.3%Over 34 = 53.2%Veterans = 7.6%
Source: Virginia Employment Commission
The Local EconomyUnemployment by CountyMarch 2014
Roanoke County 4.9%Roanoke City 6.2%Salem City 5.3%Botetourt County 5.3%Craig County 6.2%Franklin County 5.2%
Source: Virginia Employment Commission
The Local Economy
Data sources: Virginia Employment Commission, Bureau of Labor Statistics
January-07
May-0
7
September-0
7
January-08
May-0
8
September-0
8
January-09
May-0
9
September-0
9
January-10
May-1
0
September-1
0
January-11
May-1
1
September-1
1
January-12
May-1
2
September-1
2
January-13
May-1
3
September-1
3
January-14
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
Unemployment rate - VA & ROA
urate VA urate ROA
Une
mpl
oym
ent r
ate
The Local Economy
Source: Virginia Employment CommissionNote: candidates are those with active resumes in the workforce system
$20,000-$34,999
$5,000-$19,999
Not specified
$35,000-$49,999
$50,000-64,999
$65,000-$79,999
$80,000-$94,999
$95,000 or more
Minimum desired wage of available candidates
N=33,360
The Local Economy
Source: Virginia Employment Commission
March 2014
Job openingsRoanoke City 6,772Salem 1,935Roanoke County 556Franklin County 372Botetourt County 291Craig County 18
The Local Economy
Leisure, hospitality
Private eduction, health services
Misc. services
Local government
State government
Federal government
Mining, lodging
Professional business services
Wholesale trade
Finance, insurance, real estate
Transportation, warehousing, utilities
Retail trade
Manufacturing
-600 -400 -200 0 200 400 600
Roanoke Employment, Q412-Q413YOY changes+600 jobs+0.4 pp
WagesLeisure, hospitality
Private educ, health services
Source: Virginia Employment Commission. (2014). Virginia Economic Indicators, Vol. 45, Num. 4.
Q407Q108
Q208Q308
Q408Q109
Q209Q309
Q409Q110
Q210Q310
Q410Q111
Q211Q311
Q411Q112
Q212Q312
Q412Q113
Q2135000
7000
9000
11000
13000
15000
17000
19000
21000
23000
25000Separations and Hires, Roanoke City
Separations Hires
# se
para
tions
, hir
es (`
000)
Recovery
The Local Economy
Recession
Data source: U.S. Census Bureau, Center for Economic Studies ; Author’s calculationsNote: No distinction between full-, part-time, or temporary hires; no distinction between voluntary and involuntary separations
Upward trend in each since Q1 2010
Hires currently outpacing separations
The Local Economy
May-0
7
September-0
7
January-08
May-0
8
September-0
8
January-09
May-0
9
September-0
9
January-10
May-1
0
September-1
0
January-11
May-1
1
September-1
1
January-12
May-1
2
September-1
2
January-13
May-1
3
September-1
3
January-14
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Unemployed per Job Opening
Roanoke VA
#Une
mpl
oyed
/#Jo
b op
enin
gsunemployed = job openings
Labor surplus
Labor shortage
Labor shortages untilearly 2009
Labor surpluses untilearly 2013
More pronouncedsurpluses in ROA
Currently shortages inROA and VA; upwardpressure on wages
The Local Economy
Source: BLS and author’s calculationsNote: Real wages adjusted using CPI for Southeast Region (1996=100); wage values assume work 40 hours per week and every week per year; Q1 wages
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013450
500
550
600
650
700
Real wages VA and Roanoke City, 2001-2013
Roanoke Linear (Roanoke) VA Linear (VA)
Real
wag
es, $
/wee
k
Roanoke average real wage$512/weekFalling by $0.67/year
Virginia average real wage$654/weekRising by $3.44/year
Wage gap = $142/week
Gap grew by ~$4.10 per year between 2001-2013
The Local Economy
Source: BLS and author’s calculationsNote: Real wages adjusted using CPI for Southeast Region (1996=100); wage values assume work 40 hours per week and every week per year; Q1 wages
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013450
500
550
600
650
700
Real wages VA and Roanoke City, 2001-2013
Roanoke Linear (Roanoke) VA Linear (VA)
Real
wag
es, $
/wee
k
Roanoke average real wage$512/weekFalling by $0.67/year
Virginia average real wage$654/weekRising by $3.44/year
Wage gap = $142/week
Gap grew by ~$4.10 per year between 2001-2013
Upwardmovement?
The Local EconomyRichmond$34,964
Lynchburg$43,951
Virginia Beach$32,217
Roanoke $42,120
Sources: http://www.findthebest.com/ with 2013 data; Author’s calculations
0.020 0.030 0.040 0.050 0.060 0.070 0.080 0.0900.020
0.030
0.040
0.050
0.060
0.070
f(x) = − 1.02794984949486 x + 0.115957394264859R² = 0.631433799231031
f(x) = NaN x + NaNR² = 0 Beveridge Curve, Roanoke MSA
Unemployment rate
Job
open
ing
rate
(JO
/LF)
Recovery
The Local Economy
Data sources: Virginia Employment Commission, Bureau of Labor Statistics ; Author’s calculations
Recession
Long run unemployment rate average for Roanoke MSA = 4.3%(1999-2014)
Job opening rate at 4.3% unemployment rate during recession = 4.4%
Job opening rate at 4.3% unemployment rate during recovery = 7.2%
Future Labor Market
Offi ce a nd Administ ra ti ve Support Occupa ti ons
Sa les a nd R ela t ed Occupa ti ons
Food Prepa ra ti on a nd Serving R ela t ed Occupa ti ons
B usiness a nd Fina nc ia l Oper a ti ons Occupa ti ons
Educa ti on, T ra ining , a nd L ibra ry Occupa ti ons
Ma na g ement Occupa ti ons
Comput er a nd Ma t hema ti ca l Occupa ti ons
Tr a nsport a ti on a nd Ma t er ia l Moving Occupa ti ons
Const r ucti on a nd Ext ra cti on Occupa ti ons
H ea lt hca r e Pr a cti ti oners a nd Technica l Occupa ti ons
541,884
414,390
294,938
257,351
234,584
254,349
199,506
226,602
197,026
191,430
613,286
472,738
340,905
317,155
290,152
275,909
267,482
257,639
243,212
240,333
Employment projecti ons (2020), Roanoke2010 Estimate 2020 Projection
$37,130
$20,310
$60,190
$49,010
$90,110
$67,570
$31,580
$34,500
$73,960
$32,220
Data sources: Virginia Employment Commission, Bureau of Labor StatisticsNote: salaries are mean annual wage, May 2013, Roanoke
Future Labor Market
Labor demand Output
Real wage
L and K substitutabil
ity
Future Labor Market
Labor demand Output
Real wage
L and K substitutabil
ity
Future Labor Market
Labor demand Output
Real wage
L and K substitutab
ility
Future Labor Market
Labor demand Output
Real wage
L and K substitutabil
ity
Computers strongly complement non-routine cognitive tasks (high wage)Abstract reasoning tasks (problem solving, coordination, or other high management jobs)
Future Labor Market
Labor demand Output
Real wage
L and K substitutabil
ity
Computers directly substitute for routine tasks (middle-class)Bookkeeping, clerical work, repetitive production tasksAutomation of routine work
Future Labor Market
Labor demand Output
Real wage
L and K substitutabil
ity
Computers have little direct impact onnon-routine manual tasks (low income)Janitors, security guards, truck drivers, waiters
Thank you
Questions?CONTACT INFO
@RnningEconomist
http://therunningeconomist.blogspot.com
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