Overview of Montanas Labor and Business Trends Barbara Wagner, - - PowerPoint PPT Presentation

Overview of Montana’s Labor and Business Trends

Barbara Wagner, Senior Economist

Presentation to the Revenue and Transportation Interim Committee, November 19, 2010

Personal Income Growth by Quarter, U.S. and MT

• 2.5%
• 2.0%
• 1.5%
• 1.0%
• 0.5%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5%

US Montana

U.S. and MT Unemployment Rates Since 2000

1

0.0 2.0 4.0 6.0 8.0 10.0 12.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Recession MT US

Source: Bureau of Labor Statistics, Current Population Survey and Local Area Unemployment Statistics.

Indexed U.S. and MT Payroll Employment

Employment in Dec. 2007= 100%

90.0% 92.0% 94.0% 96.0% 98.0% 100.0% 102.0% Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10

MT US

Source: Current Employment Statistics, Seasonally Adjusted.

The Whys of a Jobless Recovery

• 1. Employment lags an economic recovery
• 2. Increases in labor productivity
• 3. Structural unemployment
• 4. Business uncertainty is delaying hiring

Employment Loss and Duration,

U.S. vs. MT Last Three Recessions

US MT Official Duration of Recession in Months Percent Loss of Employment, Peak to Trough Months until Employment Recovered Percent Loss of Employment, Peak to Trough Months until Employment Recovered 1990

8 1.5% 32 1.0% 4

2001

8 2.0% 48 0.5% 10

2007

18 6.1% 34 and counting 5.8% 30 and counting

Income Growth has not Resulted in Job Growth Because of Labor Productivity

Source: Bureau of Labor Statistics, Quarterly Labor Productivity for the U.S.

85 90 95 100 105 110 115

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 2005 2006 2007 2008 2009 2010

Output Per Hour Output Hours Worked

Income Growth has not Resulted in Job Growth Because of Structural Unemployment

Source: Bureau of Labor Statistics, JOLTS job openings and CES nonfarm payroll employment.

124,000 126,000 128,000 130,000 132,000 134,000 136,000 138,000 140,000 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500

Dec-00 Apr-01 Aug-01 Dec-01 Apr-02 Aug-02 Dec-02 Apr-03 Aug-03 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10

U.S. Employment and Job Openings

Job Openings Employment

Income Growth has not Resulted in Job Growth Because of Structural Unemployment

• Structural unemployment only explains part of

the disparity between increasing job openings and employment

• Lower wages, other budget concerns, and enhanced

unemployment insurance benefits also play a factor

• Still need more job openings to regain

employment levels.

Income Growth has not Resulted in Job Growth Because of Structural Unemployment

Source: Bureau of Labor Statistics, JOLTS job openings and CES nonfarm payroll employment.

124,000 126,000 128,000 130,000 132,000 134,000 136,000 138,000 140,000 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500

Dec-00 Apr-01 Aug-01 Dec-01 Apr-02 Aug-02 Dec-02 Apr-03 Aug-03 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10

U.S. Employment and Job Openings

Job Openings Employment

Income Growth has not Resulted in Job Growth Because of Business Uncertainty

• Businesses have cash to hire more employees

– Moody’s estimates $1-2 trillion in cash reserves

• Conflicting economic and political news creates

uncertainty

• Recession may have long-term impacts on

consumer spending

– Consumer expenditures represent about 70% of GDP

Consumers are Cutting Back on Consumption and Saving More

Source: Bureau of Economic Analysis, U.S. Department of Commerce. Personal Income Composition and Disposition

2,000 4,000 6,000 8,000 10,000 12,000 14,000

Components of Personal Income Consumption Taxes

Savings

Other

The Whys of a Jobless Recovery

• 1. Employment lags an economic recovery
• 2. Increases in labor productivity
• 3. Structural unemployment
• 4. Business uncertainty is delaying hiring

Employment in Selected Industries During Recession, Dec. 2007 Employment =100%

60% 65% 70% 75% 80% 85% 90% 95% 100% 105% 110%

Construction

Manufacturing

Mining and Logging Education and Health Services Government Trade and Transportation

Other Business Support Industries Other Consumer Industries

Relationship between Employment, Wages, and Individual Income Tax Withholding

Indexed to Dec. 2007 = 100% 60% 65% 70% 75% 80% 85% 90% 95% 100% 105% 110%

Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10

Payroll Withholding Employment Wages

Source: Quarterly Census of Employment and Wages, 6-month moving average. Payroll withholding receipts from the Montana Department of Revenue.

Relationship between Employment, Wages, and Individual Income Tax Withholding

Indexed to Dec. 2007 = 100%

60% 65% 70% 75% 80% 85% 90% 95% 100% 105% 110%

Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10

Payroll Withholding Employment Wages

Source: Quarterly Census of Employment and Wages, 6-month moving average. Payroll withholding receipts from the Montana Department of Revenue.

QUESTIONS?

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