South Carolina’s labor force numbers are “overestimated” and not an accurate reflection of the unemployment rate, a Federal Reserve Bank official said Friday in response to an increase in the jobless rates.
“I think we are getting a false reading on the labor force,” said Rick Kaglic, senior regional economist at the Charlotte branch of the Federal Reserve Bank of Richmond.
He called South Carolina’s rise in unemployment to 6.8 percent in May from 6.7 percent in April “a head scratcher.”
“We have been talking to businesses and economists around the state, and there is nothing in the preponderance of evidence to suggest that South Carolina’s economy is on anything other than solid footing,” Kaglic said. “Things are getting better, not worse. We don’t believe the numbers are an accurate barometer of labor market participation.”
He believes a more accurate measure of the labor force will begin to materialize with the June numbers because the Fed saw a similar pattern of inflated labor force figures during the first part of last year.
The jobless rate is based on the difference between the number of employed workers and the size of the labor force, which includes unemployed people who are seeking jobs.
Kaglic said the U.S. Bureau of Labor Statistics surveys 60,000 households across the U.S. to get a sampling of the labor force. In South Carolina, “it’s a very small sample size,” he added.
The data are then mixed with other statistics across the Southeast to compile an estimate, which could be skewing the state’s numbers, he said.
According to the latest estimate the S.C. Department of Employment and Workforce received from the statistics bureau, the Palmetto State’s labor force jumped by nearly 7,500 people in May to roughly 2.26 million and has expanded by some 84,000 people during the past 12 months. The number of people reporting an inability to find work rose more than 1,850 to about 153,000 last month, an increase of about 19,000 since May 2014.
The number of people working in South Carolina reached a new high in May, up to more than 2.1 million. About 65,000 people have found work since May 2014, according to the state employment agency.
Sectors showing job increases in May included manufacturing, education and health services, information and other services. Areas losing jobs included construction; financial activities; government; leisure and hospitality; professional and business services; and trade, transportation and utilities.
The Charleston area reported the lowest jobless rate in the state at 5.7 percent in May, though it was up from 5.2 percent in April. The area’s labor force increased by about 3,000 to roughly 362,000, according to the state agency.
Nationally, the unemployment rate rose slightly to 5.5 percent in May from 5.4 percent in April.
Rates rose in 25 states, driven higher in many cases by more people who began looking for work but didn’t immediately find jobs. Rates fell in 9 states and Washington, D.C., and were unchanged in 16 states, the Labor Department said Friday.
Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise.
The Associated Press contributed to this report.