By Priyanka Dayal McCluskey | Worcester Telegram & Gazette | February 24, 2013
For more than two years starting in early 2010, the Massachusetts unemployment rate fell steadily, indicating that the economy was improving after a severe recession.
But recently, the trend has reversed. After falling to 6 percent in May and June of 2012, the unemployment rate ended the year at 6.7 percent.
In the Worcester metropolitan area, unemployment fell to 6.4 percent in April and May but rose to 7.2 percent by year’s end.
The reversal may be unwelcome, but it’s not entirely surprising, given the slowdown in economic growth during the second half of 2012, according to Northeastern University economist Alan Clayton-Matthews. The Massachusetts economy grew just 1 percent in the last quarter of 2012, Mr. Clayton-Matthews reported in the journal MassBenchmarks.
“There were actually net job losses in the second half of the year, and that was happening at the same time as an increase in the workforce,” he said in an interview.
Robert A. Nakosteen, professor at the Isenberg School of Management at the University of Massachusetts at Amherst, said the unemployment rate can rise when more people become enthusiastic about finding work and decide to join the labor force. State figures show the labor force grew slightly but stayed around 5.3 million last year.
“Things didn’t necessarily get worse,” he said of last year’s unemployment numbers, “they just didn’t get better.”
Still, Mr. Nakosteen said the increasing unemployment rate shows that one of the state’s sources of economic recovery — technology spending — is fading.
“The big spending surge sort of petered out,” he said.
Economists are also concerned about the looming federal budget cuts, known as the sequester, which are scheduled to take effect in March. Those cuts would affect defense contractors, research institutions and others. Sequestration, if it happens, could increase unemployment and slow economic growth.
Defense contractors have already stopped hiring and started “preventive layoffs” in anticipation of the cuts, Mr. Nakosteen said.
While unemployment seems to be increasing, the state’s Executive Office of Labor and Workforce Development said Massachusetts netted at least 52,700 jobs last year, including more than 800 in the Worcester area.
“We remain confident that our investments in education, innovation and infrastructure have led the way for our economic recovery and that the Commonwealth is recovering stronger and faster than the rest of the nation,” Kevin Franck, a spokesman for the office, said by email.
The unemployment rate is calculated from a monthly survey of households. Job estimates are based on a separate monthly survey of employers. Because they’re based on different surveys, the figures don’t always match.
But Andre Mayer, senior vice president for communications and research for the employer group Associated Industries of Massachusetts, is puzzled by the recent numbers.
“This is a different pattern than we’ve seen in past recoveries,” he said. “There’s considerable mystery about what’s happening here. There’s actually been quite a lot of evidence of more people working, but for some reason it’s not showing up consistently in the numbers.”
During 2012, the biggest job gains in Massachusetts occurred in professional, scientific and business services, and trade, transportation and utilities.
But layoffs have not stopped. At least 500 people have been coming through the doors of the Workforce Central Career Center in Worcester each week to apply for or sort out issues relating to unemployment benefits.
Recently, the center has seen many of the workers let go from the Henry Lee Willis Community Center and UMass Memorial Health Care in Worcester, and Ameridose LLC in Westboro.
“We see a constant flow of folks who have been laid off from businesses of a variety of sizes and profiles,” said Donald H. Anderson, director of the career center.