Delaware’s unemployment rate holds steady at 3.9 percent

DOVER — The state Department of Labor’s monthly report for August showed the unemployment rate holding steady at 3.9 percent for the third consecutive month after a fairly precipitous drop from 4.5 percent in January. The state’s rate continues to track with the national rate, which dropped to 3.9 percent back in July.

State economist Dr. George Sharpley is cautiously optimistic about the coming months, speculating that the rate may see a few more drops before 2019.

“I think the unemployment rate will probably fall a bit more before the end of the year, maybe to around 3.7 or 3.5 percent, but probably not below that,” he said.

Dr. Sharpley is a believer that the payroll data that usually lags several months behind the Bureau of Labor Statistic’s unemployment projections provides a clearer representation of what the economy is up to. By reviewing these data, he feels some of the recent job gains in the state may be overstated.

“We have payroll data through March and we’re just starting to get usable data through the second quarter,” he said. “In the recent unemployment report, construction jobs are noted to be up by 2,000 over the year which seems very unlikely. Through March, the payroll data showed it was down by 200 from March 2017 — a turnaround that quickly with an increase of 2,200 jobs just doesn’t happen. I’m quite certain that’s an overestimate.”

The recent labor report claims the state added around 7,500 jobs since August 2017, but Mr. Sharpley speculates that the “real number” is less.

“I would put the most likely job growth over the last 12 months closer to 5,000 than 7,500, but that’s more my opinion than anything,” he said. “The Bureau of Labor analysts may disagree with me, but they have a lot more confidence in their methods than I do.”

Wage growth

According to Dr. Sharpley, as the unemployment rate has been falling, wages have been rising in the state — but he recommends caution in taking the numbers at face value.

He says payroll data indicates a 1.4 percent growth in wages for the first quarter of 2018.

“That’s not much, especially since inflation is running a bit higher than that — so in real terms it’s actually a bit of a decline in wages,” he said.

Over the course of 2017 in Delaware, there was 3.9 percent wage growth from the previous year, but Dr. Sharpley says these figures are likely misleading as well.

“In 2016, the overall annual wage was $53,780 and then in 2017 that jumped to $55,856,” he said. “But, that doesn’t necessarily represent what the average worker is getting. The best wage data comes from the same payroll data that the best employment data comes from, but that includes things like bonuses that may not be spread among all employees. So although we saw some big gains there, I traced a lot of that back to financial services getting some big bonuses — typically concentrated among top executives.”

More generally though, Dr. Sharpley expects average wages to rise somewhat proportionally to the unemployment rate, provided that it falls further.

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