What's behind Georgia's rising unemployment rate?

UPDATE: Via Political Insider, we now have Gov. Deal's explanation for the rise:

"It's ironic that in a year when Republican governors are leading some of the states making the most progress, that they almost, without exception, are classified with having a bump in unemployment rates. And states under a Democratic governor's control are all showing that their unemployment rate has dropped. And I don't know how you account for that. Maybe there is some influence here that we don't know about. But when you say that California is in a better position in terms of unemployment than the state of Georgia, there's something that doesn't ring true."

In other words, career statisticians at the U.S. Bureau of Labor Statistics are cooking the books in favor of Democratic candidates for governor.  I don't know about you, but I'm picking up a distinct whiff of desperation in the political winds.

It is absolutely implausible that such a conspiracy could be carried out without detection and without somebody blowing the whistle on it. Furthermore, if basic economic data had indeed been rejiggered for political reasons, as Deal suggests, the consequences on the stock market, the bond market, the Federal Reserve, the banking industry and the global economy would be enormous. The notion that anybody would take such a gigantic risk to bolster the political argument in favor of ousting Nathan Deal from the Georgia governor's mansion is ...  it's just nuts.

Sure, some of Deal's most diehard supporters may shake their heads up and down in support of such a notion, but anybody else will surely recognize it as a pretty pathetic exercise

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The unemployment rate for Georgia -- already the second highest in the nation at 7.8 percent, ahead of only Mississippi -- jumped to 8.1 percent in August, according to data released by the state Department of Labor. That creates a pretty tough political environment for Gov. Nathan Deal, who is trying to campaign for re-election as a job creator.

Afterall, "We're No. 1 in Site Selection magazine" is a poor rejoinder to "thank God for Mississippi". And the picture doesn't get any prettier no matter how you view it. For example, when Deal took office, 10 states had higher unemployment rates than Georgia. RIght now only one does, and after release of new national numbers tomorrow, that number could even be down to zero.

The diversion from the improving numbers on the national scene are also ominous.

It's hard to know for sure what's behind that jump in the unemployment rate. State Rep. Buzz Brockway, Republican of Gwinnett, tries to argue at Peachpundit that it's a function of a growing Georgia workforce. That's plausible, but the data available so far don't validate Brockway's thesis. For example:

  • From July 2013 to July 2014, the Georgia workforce grew from 4,772,180 to 4,777,591. That's an increase of just 5,411, or 0.1 percent, hardly enough to explain what you see above;
  • And if you look at federal data in the entire time frame reflected in the chart above, the civilian workforce in Georgia has grown by just 1.4 percent since January 2010. For comparison's sake, the national civilian workforce grew by 1.7 percent in that same time period.** So that does not seem to be the explanation.

I also want to point out that the blame doesn't lay entirely or even largely with Deal. The role of one-term governors on a state's economic performance is vastly overstated.These are longer, deeper trends at work, which means it's going to take longer, deeper changes to reverse them.

Where Deal can be faulted is in perpetuating a long-term economic strategy of tax cuts and giveaways to business at the expense of investing in the state's physical and human infrastructure and in the quality of life available here. Sure, businesses trolling for the lowest-cost environment and the biggest handouts love that approach. That doesn't mean it will pay dividends for the people of Georgia, and evidence to the contrary continues to pour in. I've been arguing for a long time now -- long before this election season -- that Georgia is in a long-term tailspin, measureable not just in its unemployment rate but in sharply declining median incomes and stagnant GDP as well.

Statistically, I think the evidence is compelling.

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** That's total number in the workforce, not workforce participation rate.