On March 19, we announced that Washington’s seasonally adjusted unemployment rate for February was unchanged from January, at 6.4 percent, while jobs grew by an estimated 2,500.
In assessing the report, our labor economist said, “That’s a positive sign. The economy is holding its own.” Many people may wonder why it’s a good sign that the unemployment rate didn’t get better.
Economics can often be confusing, but in this case it comes down to simple math:
Unemployed job seekers ÷ total labor force = unemployment rate
As people begin to look for work, they become part of the labor force, even if they don’t have a job yet. In that case, they would be counted in both the “unemployed job seekers” number and the “total labor force” number. This sign of worker optimism actually can cause the unemployment rate to rise if job seekers aren’t able to quickly find jobs.
In February, two things happened that we like to see: Washington’s labor force grew by about 9,500, and the number of unemployed job seekers shrank by about 2,200 (both figures are seasonally adjusted). This is a nice contrast to the past year, when much of the drop in the unemployment rate was due to a shrinking labor force as many unemployed workers simply quit looking for work.
Something else to keep in mind if you’re struggling with the math: We routinely round the unemployment rate to the nearest 1/10th of a percentage point; otherwise, the February unemployment rate would have dropped to 6.35 percent.
Bottom line: The unemployed had a somewhat better time finding work last month. In these times of restrained expectations, that counts as a “positive sign.”
Sheryl Hutchison is Employment Security’s communications director.