First time in 5 years state in worse shape; federal cuts cited
The higher jobless rate in Massachusetts indicates that those with less education and lower incomes continue to struggle to find work, economists said.
The Massachusetts unemployment rate in November surpassed the nation’s for the first time in more than five years, suggesting weaker conditions here even as the national economic recovery accelerates.
The state unemployment rate was 6.4 percent in April, compared to 7.5 percent nationally. In November, the state rate was 7.1 percent, compared to 7 percent nationally, the state Executive Office of Labor and Workforce Development reported Thursday.
“It’s frustrating to be this far in a recovery and have the unemployment rate be as high as it is,” said Daniel Hodge, director of Economic and Public Policy Research at the Donahue Institute at the University of Massachusetts. “Given our higher levels of education in Massachusetts, we typically should be below the US average.”
November marked the fist time since May 2007 that the state unemployment exceeded the nation’s. Economists said automatic federal budget cuts, known as sequestration, have taken a disproportionate toll on the state economy because of the high concentration of research institutions and defense contractors here that rely on federal grants and other funding.
Massachusetts businesses also have been affected by the global economic slowdown, particularly in Europe and China, which has resulted in weak exports.
“Those dollars in Washington are the fuel of the innovation economy here, the research grants, defense, and other contracts are a big part of what drives the state economy along with the export markets around the world,” said University of Massachusetts at Dartmouth public policy professor Michael Goodman. “When both of those things start to grow more slowly or shrink, we’re going to feel it.”
A report released earlier this week from the Donahue Institute, an economic research arm of the University of Massachusetts, estimated that sequestration has cost the state about 14,000 real or expected jobs in roughly the past year. It also estimated that the cutbacks reduced the state’s economic output by $1.4 billion, resulting in a $63 million decrease in state tax revenues.
Elliot Winer, a former state labor economist who now works as a consultant, said the rising unemployment rate in Massachusetts shows how the state’s economy is influenced by larger political forces and the global marketplace.
“We had a huge advantage and we’ve seen that just wither away,” he said. “That’s of some concern.”
Yet, the state’s situation is far from dire, said Northeastern University economics professor Alan Clayton-Matthews. The state unemployment rate is estimated from a survey of households, but a separate survey of employers also released Thursday showed that the state added 6,500 jobs in November, after gaining 9,400 in October.
The data from both surveys are subject to regular, and sometimes significant, revision.
The employers survey has shown steady job gains for the last four months, Clayton-Matthews added. Other indicators, such as strong home sales and rising incomes, also suggest Massachusetts’ economy is doing better than the unemployment rate would indicate, he said.
In more normal times, Clayton-Matthews said, Massachusetts’ unemployment rate tends to hover about seven-tenths of a percentage point below the nation’s.
Economists said this is because the state’s workforce has one of the highest proportions of residents with college degrees in the nation, and college graduates have higher rates of employment.
The higher jobless rate in Massachusetts indicates that those with less education and lower incomes continue to struggle to find work, economists said. Andrew Sum, a Northeastern University economics professor, said the basic problem remains that the economy is not generating enough jobs.
The unemployment rate is high, but it still doesn’t include people who have given up looking for work.
The number of those workers, whom Sum calls the “hidden unemployed,” has increased by 25,000 in Massachusetts since last year, to about 123,000 he said.
“These numbers are just awesomely high — in a bad way,” Sum said. “We have to find some way to address their needs.”