The unemployment rate in the Buffalo Niagara region dipped to a seven-year low of 5.8 percent during October as the pool of local workers continued to shrink.
With workers dropping out of the labor pool, partly because of a spate of retirements from older employees, the region’s modest job growth has helped push the jobless rate down to a level not seen since the start of the Great Recession.
The local unemployment rate now has been below 6 percent for three straight months – the first time that has happened since the late summer and early fall of 2008, according to state Labor Department data.
Two major trends continue to shape the local labor market. First, the region is adding jobs at a modest pace, although one that lags well behind the growth rates both statewide and nationally. Buffalo Niagara added 700 jobs from November 2013 to November 2014, a 0.1 percent annual growth rate – one that is just a fraction of the 2 percent increase in jobs nationally and just a tenth of the increase statewide.
“We’re still positive,” said John Slenker, the Labor Department’s regional economist in Buffalo. “It’s been going on for a few months, but we’re still positive.”
While the pace of hiring has slowed markedly over the past three months, the local labor market is shrinking as older workers retire and drop out of the labor pool. Economists aren’t sure of all of the reasons behind the shrinking labor pool, but they generally agree that a big factor behind the drop is a flurry of retirements of older workers, some of whom may have delayed their retirement when the recession hit and the plunge in the stock market reduced the value of their retirement savings.
With the stock market rebounding, many of those workers may have decided they now can afford to stop working.
At the same time, the region has been steadily recovering from the recession. Private-sector employment has grown by nearly 24,000 jobs since the darkest days of the recession, leaving the number of private-sector jobs in the region at its third-highest level for any November in the last 24 years, Slenker said.
Economists also note that fewer Americans are joining the labor force, possibly because they have grown discouraged with their job searches and have stopped looking for work, pushing national labor-participation rate to its lowest level in 40 years at about 62 percent of eligible adults. The local labor force shrunk by 3.1 percent in the last year, with 17,800 workers dropping out of the job market over the last 12 months.
With fewer people actively looking for employment – discouraged workers who have given up their job search don’t count in the unemployment data – even a modest uptick in hiring can push jobless levels sharply lower.
November’s 5.8 percent unemployment rate was down from 6.6 percent in November 2013. The jobless rate also was up slightly from 5.7 percent in September, although economists warn that those figures aren’t directly comparable because they aren’t adjusted for seasonal factors. In addition, a change of one-tenth of a percentage point is too small to be statistically significant.
Even so, the jobless rate was the lowest for any November since it stood at 4.8 percent in 2007, before the recession began.
As the labor force has been shrinking, so has the number of people who are employed. The region had 12,300 fewer people who were employed during November 2014, down by 1.3 percent from last year.
Jobless levels in Buffalo Niagara were tied with Glens Falls and Syracuse for the eighth-highest among the state’s 14 major metropolitan areas. Areas with higher unemployment rates included Binghamton, Elmira, Utica and New York City.