By Dave Oberting
In a July 18th press release, the Vincent Gray administration announced that the unemployment rate in the District dropped 0.1% — from 7.5% to 7.4%. This number is known as the U3, or headline, unemployment rate. It has declined steadily, if slowly, since the bottom of the recession.
However, the U3 rate tells only part of the story with regard to the true unemployment situation in the District. The full picture is more dire and requires a more muscular policy response.
If you dig deeper into the unemployment figures, here’s what you’ll find:
As mentioned, the headline rate is 7.4%. This rate represents only the total number of DC residents, as a percentage of the civilian labor force, who are unemployed and actively looking for a job.
This rate leaves out two important categories of DC residents — those who are working part-time involuntarily and those who have given up looking for a job altogether out of frustration.
These categories are captured in what’s known as the U6 unemployment rate. It incorporates these two categories and provides a more complete, but still somewhat deceiving, picture of the District’s unemployment situation.
The U6 rate is published quarterly, not monthly, so as of the end of Q1, the U6 rate for the entire District was 13.9%. This rate, however, is not spread evenly throughout the District. High income wards like 2 & 3 have virtually no unemployment at all, as evidenced by their respective 3.3% and 1.7% U3 unemployment rates.
The District doesn’t currently calculate the U6 rate by wards, most likely because the Bureau of Labor Statistics doesn’t generate a large enough sample size. Having a better understanding of the U6 rate is important enough to warrant the District conducting its own monthly survey to assemble this data.
Below, we present what we believe to be a more accurate analysis of the true unemployment picture in the District.
**Note: At the time of this writing, 8/14/14, the only ward level unemployment data available on the DOES website is from 2012. This is odd because more up to data has been released since then. It appears DOES has taken this data down for some reason. We have December, 2013 data posted on our website, which we’ll use for this exercise.
U3 Rate as of December 2013
W1 = 5.9%
W2 = 3.3%
W3 = 1.7%
W4 = 5.5%
W5 = 9.4%
W6 = 6.9%
W7 = 11.6%
W8 = 17.7%
Estimated U6 Rate
The District’s U6 rate is 87% higher than its U3 rate. We used that ratio (1.87:1) to calculate our estimate of the current U6 rate by wards:
W1 = 11.03%
W2 = 6.17%
W3 = 3.18%
W4 = 10.33%
W5 = 17.65%
W6 = 12.90%
W7 = 21.78%
W8 = 33.24%
While these numbers are estimates, they do offer a more realistic picture of unemployment in the District.
The combined 27.51% U6 rate east of the Anacostia river, as well as Ward 5’s 17.65% rate constitutes an unemployment emergency bordering on a crisis in the predominantly African-American portions of the District. It cannot continue indefinitely. These issues require a more serious response by a serious DC government.
We should also pay attention to the quality of the jobs being created in the District. Nationally in June, the majority of jobs created across the country were part-time jobs. Specifically 500,000 full-time jobs were lost and 800,000 part-time jobs were created. There is no reason to think the District is different from other jurisdictions.
Also note this 2013 State of Downtown Report - 2013 State of Downtown – All Sections, published bt the Downtown Business Improvement District. It claims that there has been no significant growth in DC private employment since August. The report covers only downtown, but if there is no job growth there, what does that mean for the rest of the District?
We already produce too many low-skill, low-wage jobs in the District and not enough middle-skill, middle wage jobs. This situation cannot be rectified without faster economic growth.
The District’s economy actually contracted by .005% in 2013 from $105.99 billion to $105.47 billion. There is no reason to believe we’ve emerged from that recession this year. The District government must implement policies that are more conducive to faster economic growth. That is the only way we’ll create the numbers and kinds of jobs required to address this crisis. Better educational opportunities and better job training are important longer-term goals, but the immediate priority is an economy that grows faster and the job creation that comes with it.
Dave Oberting is the executive director of Economic Growth DC, a political and economic advocacy organization focused on the District and its economy. Follow him on Twitter @GrowthDC or email him at firstname.lastname@example.org.