Biden weighs in on Spokane’s lowest unemployment on record

Record low unemployment in Spokane garnered the attention of the White House this week.

At 4.1%, the July unemployment rate for the Spokane-Spokane Valley metro area was the lowest on record, according to data from the Bureau of Labor Statistics dating back to 1990.

Released on Wednesday, the record figure shows the labor market is recovering from the impacts of the coronavirus, according to President Joe Biden.

“Under Bidenomics, America is back to work and leading the world again, and with the Spokane area at its lowest unemployment rate on record, it is helping drive America’s strong economic growth,” Biden said in a statement. “With my investments to help rebuild Spokane’s infrastructure and private sector investments pouring in across the state, Spokane can help lead America’s economy for the next generation too.”

Plagued by low poll numbers, Biden this summer has been stressing his economic policies in appearances and speeches across the county. Invest.gov is a website the White House created to showcase the public and private investments spurred by those laws approved by Biden. The 2021 American Rescue Plan Act, for instance, is helping pharmaceutical maker Jubilant HollisterStier expand its Spokane plant, which the company says will increase its vaccine manufacturing capacity and create 200 jobs by 2025.

Doug Tweedy, regional economist for the state Employment Security Department, said the unemployment rate released by the bureau is a preliminary estimate and subject to change upon revision.

Still, it is the lowest estimate on record.

“Yes, 4.1% is a record preliminary estimate for the Spokane-Spokane Valley metro-area, and it shows there’s opportunities for those looking for work,” but he said the labor market is more complicated than that.

Grant Forsyth, chief Economist for Avista Corp., said administrations often use the unemployment rate to make the case that they are helping workers, but it does not tell the full story.

“The previous administration talked about the unemployment rate as well, but for somebody who’s seriously trying to evaluate the labor market and understand what’s going on, they’re not going to just look at the unemployment rate.”

People are classified as unemployed if they are out of work and actively seeking employment. Otherwise, they are excluded from the labor force count.

Tweedy said this could explain why the unemployment rate is low, yet there are still widespread labor shortages.

“It’s a different time, because employers are still having difficulty finding workers,” he said. “There’s people that have dropped out of the labor force because they have become discouraged or because of lingering fears of COVID – there’s a lot of reasons.”

Tweedy said not only does the unemployment rate incompletely represent the condition of the labor market, but the statistic is subject to error because of the imprecise method by which labor data is collected.

He pointed to decreasing response rates to a monthly household survey conducted by the Bureau of Labor Statistics in which the agency collects labor data, including the unemployment rate.

“People have responded less and less to the government surveys, and that’s one of the issues that we have,” he said.

In April 2013, 90.3% of households responded to the survey, according to bureau data. That figure has dramatically decreased to 70.7% in April of this year.

A shrinking sample size means an increase in the variability of the survey’s findings, Forsyth said.

“The sample size that the unemployment rate is based on is actually pretty small, which means there’s a lot of noise in the data,” he said.

Further, unemployment numbers derived by the bureau are often less accurate than those found by state-level agencies, Tweedy said.

This is because the federal government does not take into account that the number of employed individuals is constantly fluctuating.

“Employers pay U.S. tax for every one of their workers, so we know the number of workers, and that’s not a survey – that’s actual,” he said.

Washington state recalculates this number every quarter, as opposed to the bureau, which does so annually.

After a monthslong process of calculating accurate quarterly employment numbers, Washington state officials will revise the preliminary unemployment rate estimates.

Until then, unemployment numbers are subject to variability, Tweedy said.

“All I would say is that we’re waiting for more revised numbers.”

Forsyth said he has seen much disparity between federal and state unemployment numbers.

“In my own work, I’ve switched to using Washington state data rather than data release by the bureau,” he said. “I noticed when we’d turn over to a new year there were sometimes enormous revisions to data for that previous year.”

Though the record unemployment estimate is imperfect, Forsyth said it is reassuring.

“It certainly shows what’s happening with the labor market in the United States right now isn’t all negative,” he said. “But I would say it’s just more complicated than what can be communicated simply by the unemployment rate.”