These are the findings of Chmura Economics & Analytics in a study entitled “Estimating the Economic Loss of Daylight Saving Time for U.S. Metropolitan Statistical Areas” commissioned by the Carpenter Co. The study focused on only the aspects of economic losses where solid evidence from peer-reviewed academic journals could be obtained, showing how the DST change can lead to an increase in heart attacks, workplace injuries in the mining and construction sectors, and increased cyberloafing that reduces productivity for people who typically work in offices. A reasonable economic cost was then developed from the economic costs of heart attacks, workplace accidents and cyberloafing and applied to the more than 300 Metropolitan Statistical Areas (MSA) in the U.S.

The jobless rate is falling, and that’s good news. But it is declining for the wrong reasons, and that’s not good for a variety of reasons.

The rate has fallen significantly since the recession ended. It stood at 6.6 percent in January. The government will release the February figures Friday.

In the first quarter of 2013, many establishments that provide home care for the elderly were reclassified from NAICS 814110 (private households) to 624120 (services for the elderly). This reclassification, while appropriate according to the BLS, may cause problems for anyone analyzing the health care industry, especially in the regions that were most affected.

Nationwide, this reclassification greatly contributed to the large jump in health care and social assistance (NAICS 62) employment over the quarter, from a post-recession average year-over-year growth rate of 1.7% to 4.3% growth in the first quarter of 2013. The effect is even more pronounced in sub-industries of health care, as illustrated in the table below.

Individual states most affected by this reclassification are California, Massachusetts, Missouri, Nebraska, and Washington, with California and Washington as the top two. California recorded 21.4% growth in the health care and social assistance sector; Washington recorded 11.5% growth. The map below illustrates the regions with the largest percentage change in employment in the health care sector for the first quarter of 2013.

This change also has a corresponding deflationary effect in the “other services” sector (NAICS 81). Nationally, year-over-year employment growth in that sector went from a positive 3.4% in the fourth quarter of 2012 to a negative 8.5% in the first quarter of 2013. There is a similar magnification of the effect in sub-industries of other services as well. Again, California and Washington experienced the greatest percentage change in this sector, with Massachusetts, Missouri, and Nebraska rounding out the top five. California recorded 41.4% loss and Washington 35.3% loss.

The BLS published a note on their Business Employment Dynamics (BED) website regarding the change:

First quarter 2013 data were affected by an administrative change to the count of establishments in the education and health services industry. A review of the administrative data from which the BED data are derived revealed that certain establishments that provide non-medical, home-based services for the elderly and persons with disabilities had been misclassified in the private households industry (NAICS 814110)…. These establishments are now…classified in services for the elderly and persons with disabilities (NAICS 624120.) This non-economic industry code change artificially inflates the data for gross job gains, openings, births, and the net employment change for the following data series: national total private, state total private, the education and health services sector, and firm size class.

The note makes it clear that the change is a result of a misclassification in prior periods, rather than a fundamental change in the industry. That does not diminish the inflationary effect for the first quarter of 2013, however, and this effect is important to take into consideration when performing any analysis on employment in the health care or other services industries.

Another important change in the first quarter of 2013 is that to the funds, trusts, and other financial vehicles sub-sector (NAICS 525). This is a sector that should typically have little to no employment, according to the census definition:

… These entities earn interest, dividends, and other property income, but have little or no employment and no revenue from the sale of services.

The adjustment that occurred in this period reassigned many employees from these types of funds to other, more appropriate industries in the finance sector. Typically, employees who manage financial vehicles of these types are recorded as part of the other financial investment activities industry group (NAICS 5239). Much of the employment loss from the funds, trusts, and other financial vehicles sub-industry was moved to that industry in this quarter, but some also went to other industries in the finance sector (NAICS 52), depending on firm and region.

The nationwide adjustment in the first quarter of 2013 caused a reduction in employment in the funds, trusts, and other financial vehicles sub-industry in the majority of regions in the United States. The reduction varies, however, depending on the level of employment prior to the adjustment. Connecticut, Nevada, and Virginia all recorded more than 98% employment loss in this sub-industry. In Virginia, 88% of employment affected by this change moved from other insurance funds (NAICS 525190) to direct property and casualty insurance carriers (NAICS 524126). Other states experienced other movements, depending on the employment landscape prior to the reclassification. See the map below for more information on how individual states were affected.

Again, this is an adjustment in reporting practice, not a fundamental change in the classification of the industry. However, as with the changes to the health care and other services sectors, the deflationary effect of reclassifying a large percentage of employees of the sub-sector must be taken into consideration when performing any analysis of the finance sector.

Over the past several months the labor market has been sending out some mixed signals in terms of its relative strength. For instance, initial unemployment claims data—typically a reasonable signal of the overall labor market—has been trending downward and is not far off from a new 35-year low. Once adjusted for the size of the current population, the September figure of the seasonally adjusted 4-week moving average of 305,000 initial claims would “traditionally” be associated with a very strong labor market. In October the number of claims have edged upwards, but still remain fairly low.

Recently several economists & bloggers—Marginal Revolution, The Money Allusion, Calculated Risk, and others—have noted the disconnect between the recent unemployment claim numbers and the rest of the labor market—job creation, the unemployment rate, and wage growth. Some have taken it as a sign that the labor market is not really as weak as the headline unemployment rate suggests, while others see it as a symptom of the decline of manufacturing, which frequently relies on mass layoffs to adjust output. At its lowest in early 2000 there were 0.94 claims per 1,000 people in the country. The only other periods to approach this—1989 and in 2006—the same metric was 1.16 and .96 respectively. As of the end of September, the current rate was .96 claims per 1,000 citizens—given a U.S. population estimate of 316.4 million in 2013.

However, masked in these national numbers is the marked difference in claims data between the states. Similar to our analysis that showed great disparity in job gains by state, the claims data shows a very different picture when examined at the state level. While some states are at or near record lows in terms of the level of unemployment claims per 1,000 residents, other states are still well above the number of monthly unemployment claims that would signal a return to a healthy labor market.

In contrast to the past two recoveries where a vast majority of states had also seen their claim data nadir in close correlation with the national job market, this recovery has seen several states lag well behind the leaders in terms of layoff declines. One simple measure is to see how the average state was doing in terms of its claims per 1,000 residents when the national economy experienced a new low in initial claims. The elevated figure for this simple average among the 50 states and the District of Columbia in 2013 also features a higher weighted variance for these claims per 1,000 people currently among the states as compared to the corresponding periods in 2000 and 2006.

Another way to examine this is look at the 52-week moving average of claims by state to see in each of these periods—1989, 2000, 2006, and 2013—how close each state was to its lowest ever ratio of claims per 1,000 residents. For instance in 2000 and 2006, on average when the nation claims rate bottomed out in terms of initial claims the average state was within 14 and 17 percentage points respectively above its historic low of number of claims per 1,000 residents. In contrast in 2013, as the nation approaches its historic low for initial claims per 1,000 residents, on average the states are 26 percentage points above their previous historic low.

Essentially many states approached their historic lows in 2000 and in 2006, but much fewer states are close to their historic lows currently despite the healthy national numbers in terms of initial claims. Another way to think about it would be to posit that the economic expansions in the late 1990s and mid 2000s were rising tides that spread business activity relatively broadly across most states and MSAs. Whereas today’s expansion is a more of story of states that have and have not, where several states are beginning to forge new records for employment and many other states lag significantly behind in terms of their labor market.

While it is possible that the average of initial claims per 1,000 will narrow across many more states as the nation actually reaches new 35-year low of claims per 1,000 citizens, it is unlikely that the states which have the highest current claims rate will make enough progress in the next several months to fundamentally change the shape of this distribution. This would require large drop of in claims in Alaska, Wisconsin, Pennsylvania, Oregon, and New Jersey all of which have more been averaging more than 1.5 claims per 1,000 residents for the past year. Furthermore, we find little preliminary evidence lately that the level of initial unemployment claims are associated with the size of the manufacturing sector—as gauged by the location quotient, but we will explore this relationship more fully in subsequent blogs.

Written by Patrick Clapp and Chris Chmura.

The impact of shutting down the U.S. government is much larger than the 800,000 federal workers who are staying at home and not spending money on commuting and lunch. Even though Congress has agreed to pay these workers, the reduction and shutdown of certain services is rippling through the economy.

The Wall Street Journal cites an estimate from J.P Morgan Chase economists that “each week of a shutdown would reduce the annualized pace of fourth-quarter economic growth by 0.12 percentage point.” However, the forecast only looks at effects on government workers, not the private sector or consumer confidence.

One question missing from the various lists of FAQs about the shutdown is whether any private sector industries could be affected. Fewer people are making retail purchases, going out to eat, enjoying arts or entertainment, and/or traveling and staying at hotels when tourist attractions like the Grand Canyon or Smithsonian museums are closed. They might also delay big purchases, like a new house, even if they could get a loan from an understaffed Federal Housing Administration. That gives us four North American Industrial Classification System (NAICS) sectors for closer inspection: retail trade (NAICS code 44), real estate and rental and leasing (53), arts, entertainment and recreation (71), and accommodation and food services (72).

Next, we need to look at a comparable period. The last time the government shut down was between December 16, 1995 and January 6, 1996, a total of 21 days. We consider the effects on our selected sectors around that period for metropolitan statistical areas (MSAs). We also consider the percentage of federal employees in the area during that time period—areas with a higher percentage of federal workers implies those areas would have more furloughed workers, and likely larger impacts on local industries. Data are obtained from Chmura’s database powering the EQSuite®.

For each of the four sector categories in every MSA, we first calculated the year-over-year percent change in employment by month and wages by quarter to filter out some seasonal fluctuations. The graphs later in this post shows the percentage point changes in growth rates month to month or quarter to quarter relative to the number of people employed by the federal government in each region as a percent of total regional employment. With less demand during the shutdown, we would expect firms in these industries to cut back employees’ hours, which would show as a decrease in the growth rate of wages. To a lesser extent, they might cut their staff size, which would appear as a negative growth rate in employment.

Now for some results: The clearest story is in the retail sector, where there was a strong negative relationship between the percentage of federal employees in a region and changes in the growth rate of wages quarter to quarter in the time periods surrounding the last government shutdown. Employment in the retail sector also declined, but not as dramatically as wages, implying that businesses cut hours, rather than laying off workers to cope with the government shutdown.

The Washington, D.C. metro area ranked fifth of 353 MSAs in the percentage of federal employees in the workforce. The year-over-year growth rate in wages in the retail sector slowed 0.6 percentage points between the last quarter of 1995 and the first quarter of 1996. In the metro area with the largest percentage of federal workers, Warner Robins, Georgia, the year-over-year growth rate of retail wages fell 4.5 percentage points over that time.

Tourist areas such as national parks and museums also suffered. The year-over-year growth rate of retail wages in the Flagstaff, Arizona MSA, near the Grand Canyon, fell 1.7 percentage points between the last quarter of 1995 and the first quarter of 1996.

The effects of furloughed workers rippled through the arts, entertainment, and recreation sector as well. As federal employees were unsure if they would get paid, metro areas with a large percentage of federal employees experienced sharper drops in wages for this sector over the shutdown period and a similar drop in employment. In the Jacksonville, North Carolina MSA, home of Marine Corps Base Camp Lejeune, the year-over-year employment growth rate in the arts, entertainment, and recreation sector fell over 16 percentage points between December and January.

The year-over-year growth rate of employment and wages in the real estate sector and accommodation and food services sector were not negatively affected, suggesting they are more resistant to uncertainty caused by a government shutdown. This makes intuitive sense for the real estate sector in particular—if the only thing keeping someone from purchasing a house is delayed paperwork at the FHA, they are still going to buy a house, just somewhat later than expected.

Similar to the last shutdown, Congress said it will pay the furloughed employees even though they did not work, and employment and wages in these industries quickly bounced back—and we would expect the same when the current shutdown ends. Continuing to look at the retail sector, year-over-year growth in wages in the quarter following the shutdown was positively correlated with the percentage of federal workers in a region, implying renewed demand from now-working government employees rippled out to more hours in the retail sector.

However, that quick return to growth took place in a strong mid-1990s economy. In the midst of our current slow recovery, a similarly long shutdown could be a much larger and longer setback for workers in both the public and private sectors.

The above chart shows the MSAs most likely to be impacted by the federal shutdown based on the most recent data available. The size of each bubble represents total MSA employment, and the color of a bubble indicates the political party affiliations of the senators representing that state. MSAs closer to the top right of the chart have higher unemployment rates and a larger percentage of federal workers in their local workforce, and are expected to be hit harder by the shutdown.

Chmura Economics & Analytics recently presented its second annual Workforce Boardroom Conference. The conference theme was Illuminate to Innovate, and it brought thought leaders from a variety of disciplines together to discuss smart solutions to some big challenges facing our regions, states, and nation.

The event kicked off with a presentation from Marge Connelly, who brought her unique insight and private sector perspective on customer-centered innovation from her career in financial services and higher education. Following are some other highlights from the event.

Federal Issues, Sequestration and Your Economy

Chmura has been researching defense spending, the sequestration, and their impacts on state and regional economies. The team has developed one of the most complete datasets on federal defense spending ever constructed, and Chris Chmura’s remarks were designed to identify, inform, and inspire defense-dependent communities to action. Data-Driven Decision Making

Jay Dougherty, partner at Mercer and co-founder of the Workforce Sciences Institute, shared his candid experience with companies making location decisions today. He emphasized the use of quantitative data analysis to optimize the location, labor, cost of doing business, and business climate of a corporate decision.

Chmura team member Dan Meges joined Bruce Stephen of Monster Government Solutions to talk about workforce planning and the use of Real-Time Labor Intelligence. Monster, which started the online job posting revolution, is now manipulating its massive database of candidates and openings to help create a clearer picture of labor supply and demand. This perspective is invaluable for communities and higher education working to better align their program offerings with market trends.

Chmura’s chief statistician, Greg Chmura, took the stage to share some interesting analysis on the connection between education, innovation, and job growth. His research built on findings of the Fund for Our Economic Future in northeastern Ohio. The research is surprising - innovation and job growth don’t necessarily go hand in hand.

Measuring What Matters – New Paradigms for Economic Development

One of the goals of the conference was to challenge traditional thinking about economic development and Ed Burghard of the Burghard Group’s talk on the American Dream Composite Index (ADCI) did not disappoint. Ed suggested the audience push away from traditional outcome measures such as job creation and capital investment and instead focus on the well-being and satisfaction of the populace.

Ed has partnered with Xavier University to advance the ADCI, which uses household survey data to measure the pulse of the American sentiment. It’s a holistic measure that includes five components, including economic, a well-being, societal, diversity, and environmental indexes.

Four Business Perspectives

The conference brought four unique and valuable business perspectives to the forefront. The first was from a return presentation by David B. Trebing, General Manager, State and Local Relations for Daimler. David shared the new reality for manufacturers operating in a competitive, dynamic, global marketplace. This reality includes the need to locate production facilities in growing and emerging markets, a push towards cost reduction and efficiency, and the need for a qualified workforce.

The second business topic was presented by Carlos Solari, VP at Wilkitech. Carlos’s remarks enlightened the group on emerging trends in the cyber security industry and what communities need to know to attract and retain businesses in that sector.

Jeff Harris with Xerox Services spoke on the relationship between innovation, people, and the environment, and what that means for business and communities today. His futuristic remarks about the shifting trends in the definitions of work and the workplace prompted healthy discussions over lunch about how economic developers will adapt.

The conference closed with some practical public relations strategies from Hope Katz Bibbs, founder and president of The Inkandescent Group, LLC. Hope has helped many entrepreneurs and early-stage companies transform their innovative ideas into growth, and she shared her ideas about what it takes to help a new enterprise launch successfully and get the attention it deserves.

What’s Next?

It was an exciting two days in Richmond and Chmura thanks the engaged attendees and speakers. Now, we’re busy planning for 2014. If you would like to learn more about the 2014 conference, contact Maggie Bishop at mbishop@chmuraecon.com.

The benefit of higher education for an individual is well established: higher wages and lower unemployment rates among other things. But what about the benefits for communities? A recent study suggested a surprising answer.

What Matters to Metros, published by the Fund for Our Economic Future, is an intriguing look at the factors that influence the economies of U.S. metropolitan areas. It found that higher education is linked positively with income, output, and productivity growth, but its data did not support a positive link with employment growth.

Furthermore, the data show that metropolitan areas which have a large percentage of workers with low educational attainment (no high school diploma or equivalent) more often have faster job growth.

This latter fact, actually, should not be so surprising. After all, since businesses want to minimize costs it is reasonable that high-labor-intensive industries would relocate or expand in areas with a large number of low-skilled workers for filling low wage jobs.

Furthermore, as we pointed out in a previous blog, middle-skilled jobs in aggregate have been declining over the past decade while lower-skilled jobs have been on the upswing.

But the same blog also showed growth among the jobs requiring the most skills. Because of this, shouldn’t we see a positive link between higher educational attainment and regional job growth?

For this answer, we must return to the Fund for Our Economic Future data. A first look shows that, indeed, there appears to be virtually no relationship between employment growth (1990-2011) and the percentage of population with educational attainment of a four-year degree or higher (which we’ll call “advanced education”).

Each dot in the below chart represents a metropolitan area (encompassing 115 “mid-sized” regions). The dotted line represents the trend line best fitting the data.

Poking around in the details, however, turns up some curiosities. In certain subsets (such as metro areas with a small percentage of foreign born or metro areas in the Northeast and Midwest), we find a positive correlation between advanced education and job growth. Could the variables be interacting in complex ways so that the positive job growth effects of advanced education in communities are obscured by other factors?

Apparently so. If we adjust job growth against expectations based upon some other variables, the effect of advanced education is clearer to see.

For this purpose, I’m not going to attempt to adjust job growth for all possible variables, but will just look at two that have big impacts: (1) the industry mix—that is, the share of jobs in manufacturing, government, retail, and other sectors—and (2) the business climate. This latter factor was explored and defined nicely in the Fund for Our Economic Future work and comprises three pieces: tax costs, the rate of unionization, and energy costs.

The below chart illustrates the strong correlation between job growth and a composite index of industry mix and business climate.

Using this relationship to set expectations, we can now examine how metros perform against this benchmark. Do metros with higher rates of advanced education more often perform above expectations? The answer is yes.

The next and final chart shows job growth beyond expectations on the vertical axis versus population with advanced education along the horizontal. The data show a significant, positive link between advanced education and job growth.

It looks like higher education is, indeed, correlated with job growth! There are, however, a couple of items that need to be highlighted.

First, you may notice the horizontal scale on the last chart is irregular. This is because a stronger link between advanced education and job growth was found according to an exponential relationship rather than linear. Essentially, incremental changes in advanced education were found to have a more pronounced effect on job growth where education was higher to begin with. While certainly interesting, the exact nature of this relationship should be explored further before concluding that this non-linear relationship is the best, most accurate model.

Also, it should be noted that while rates of advanced education do positively influence job growth, the data show that other factors are more closely related. For example, industry mix, business climate, and immigration each appear to be more strongly linked with job growth than the rate of advanced education.

Furthermore, having a high percentage of population with advanced education in addition to a high percentage with low education still tests out as having a stronger connection with job growth than only having a high percentage of population with advanced education. Again, this is not terribly surprising given the occupation trends we referenced earlier.

This last point does, however, raise some questions about the community benefits of increasing education and skill levels from the lowest skill levels to mid-skill levels. It stands to reason that we should see benefits in terms of income and productivity. Perhaps we can find job growth benefits as well at this level, but that will have to wait for another blog.

Reveals Top Ten Most Impacted Metros in the Nation

Nearly three years of continuous budget wrangling in Congress has left the fragile U.S. economic recovery limping along, in many respects, instead of galloping. Sequestration and the Budget Control Act have put the squeeze on both defense and non-defense spending. In this environment, Chmura has spent a great deal of time helping state lawmakers, city officials, and other civic stakeholders understand the economic impact of these defense cuts at the community level. What does it mean to your community if a specific defense contract gets cut back or cancelled altogether? To answer these questions, Chmura mapped the supply chain of defense contractors in the nation and analyzed defense spending contract data over the past thirteen years.

First, defense spending is by design a bit opaque as credible and specific national security considerations oftentimes keep U.S. policy makers from telegraphing openly the true nature or extent of specific programs. Second, many defense contracts are multiyear projects, but public documents, such as contract award notices, make it difficult to see how payments to contractors are set to be dispersed or spent in detail. Third, many government contractors, who competitively bid and win large contracts, subcontract many aspects of the work to other firms. Thus, a single contract can impact several disparate communities at different times with different intensities over the life of the contract. Chmura has dealt with these issues by analyzing typical contract payouts and by adjusting these figures to more accurately model the flow of funds to contractors and subcontractors.

To begin answering questions regarding the previous and looming defense cuts, one must first determine how much of the budget is being cut by region. The defense industry is big, and as President Eisenhower famously noted in 1961, the military industrial complex has political momentum all its own that can alter spending based upon the peculiarities of power and influence. The Department of Defense’s spending has declined substantially from its peak in 2010. By 2012, defense spending was already cut by close to 6% (without adjusting for inflation). While these cuts are large and further cuts are expected in 2013 and 2014, they are not unprecedented. In a recent study, the Center for Strategic and International Studies examined real (adjusted for inflation) defense spending cuts since World War II and found that in the aftermath of the Korean and Vietnam wars, and at the end of the Cold War, defense spending cuts were more severe in each case than in the current environment. (For more see the full CSIS report here: http://csis.org/publication/defense-budgets-double-whammy-drawing-down-while-hollowing-out-within)

While the cuts in defense spending are real, they vary greatly across the military by branch and function. For instance, from 2013 to 2014, Army procurement is being cut 3% and Marine procurement will be down 14% while Navy procurement spending is set to rise to $39 billion—a 13% increase from the year before—and Air Force procurement spending is set to increase by 1%. Moreover, the Army’s and the Navy’s Operation and Maintenance budgets will both be cut by 4%, while the Marine’s Operation and Maintenance budget is set to expand by 4% and the Air Force’s by 5%. A public advocacy infographic shop, Timeplots, assembled an impressive infographic depicting the size and scale of the changes in government spending from 2013 through 2014, including defense spending by spending category. See the full infographic here: http://visual.ly/death-and-taxes-2014-us-federal-budget

In order to help make sense of the community impact of the recent pending defense cuts, Chmura created the following analysis to see which metropolitan statistical areas (MSAs) have been most impacted by the recent defense spending cuts. At the aggregate level, some of the largest MSAs have seen the most dramatic cuts in the period from fiscal year 2010 to fiscal year 2012. However, after adjusting for the size of the MSA, several much smaller areas stand out for the level of cuts they have experienced over this period. Similarly, by aggregate dollar figure, a few of the largest MSAs have gained the largest increases in government contracts over this period, but after adjusting for the size of the labor market in these metro areas, several much smaller U.S. metros stand out in terms of the contractual gains.

The labor market impact of these spending cuts can vary widely depending on the type and nature of the defense spending. Every industry in the area will have a different economic impact based on the size of its local supply chain and the spending spillover from its directly employed workers. However, it stands to reason that these spending cuts, as steep as they are, can be a driving force to upset labor markets in many of the nation’s MSAs, both big and small. To learn more about Chmura’s expertise and research regarding defense spending and supply chain mapping, contact us here.

The latest U.S. jobs report from early July indicates the national economy continues to add jobs at a slow but steady pace. The latest data indicates the economy has added approximately 195,000 jobs each month for the past three months. If we go back to January 2011, the nation added on average close to 185,000 jobs per month. The U.S. economy is gradually recovering and now the labor market may even be gaining some momentum.

In February 2010, the U.S. job market had hit rock bottom. From the pre-recession high of 138 million people employed, the economy had shed some 8.7 million jobs—more than 6% of total nonfarm employment had vanished. Since then, total nonfarm employment has grown to almost 136 million, which is only 1.5% below the former peak. It is likely—assuming the current pace of about 180,000 new jobs created per month continues—that the U.S economy will reach its previous peak of employment in mid-2014. At that point, the U.S. economy will be deemed to have fully “recovered” from the previous recession’s job losses.

However, while the jobs are coming back, they are not where we left them. As of the first quarter of 2013, in fact, a small number of states have already fully recovered the number of jobs lost during the last recession and have begun to set new records of employment. These states are Texas, North Dakota, Alaska, South Dakota, West Virginia, and Utah as well as the District of Columbia. Close behind these areas are another 14 states that have recovered between 98% and 99% of the jobs they lost during the previous recession—states like Massachusetts, New York, and Nebraska. These states, along with the U.S. economy as a whole, will likely regain their previous employment peak within the next 12 months.

For the remainder of the country, however, the recovery of lost jobs has been much less robust and many states remain well below their pre-recession employment levels. For instance, California’s economy was hit much harder in the previous recession than the nation; at its nadir, California had lost nearly 9% of nonfarm employment. California’s labor market is rebounding, but it still remains as of roughly 4% below its previous employment peak. It is likely that it will take California well into 2015 to recover its previous peak employment, whereas by then many other states will be setting new employment records. States like Arizona and Florida are more than 7% below their previous employment peaks, while Nevada and Michigan are more 10% below their peak nonfarm employment.

In many previous recessions, employment bounced back quickly in the nation, typically within two years of the recession starting and many times in the very same places that lost employment in first place. This recession has seen the slowest employment recovery since the Great Depression, and the jobs that are being created today are in different sectors of the economy and in different localities. The map below depicts by county how employment levels have recovered from the previous pre-recession peaks across the nation. While some areas of the country enjoy new employment records, many others are still years away from recovering all the jobs that were lost, and in some locations it is likely that the job market may never recover back to previous peak. The jobs are coming back, just not where we left them.

Source: JobsEQ®

We know it. Workforce planning and workforce training are topics being discussed in boardrooms all over the country. Whether you believe the skills gap is real or imagined, it’s a big challenge facing businesses of all sizes as well as communities and educators. It’s also the reason Chmura started a plan in 2012 to bring smart people together to talk about new and innovative ways to change the conversation.

On September 16^th and 17^th, Chmura is hosting its second annual Workforce Boardroom Conference in Richmond, VA, and the list of speakers is impressive. This year’s theme, Illuminate to Innovate!, focuses on how data (the bigger the better) can help improve the way we develop and manage talent forces across the country.

The schedule includes some important names from economic development, workforce development, business and industry, the site selection community, and education. These five perspectives promise to provide new insight and a true 360-degree view of the workforce imperative. The full schedule can be downloaded here, but here are a few highlights.

Monday kicks off with a few words from Dr. Christine Chmura, President and Chief Economistof Chmura Economics and Analytics. Chris will be discussing the impact of sequestration on industries and regions, including the impact on supply chains.

Just prior to lunch, Ed Burghard, CEO of the Burghard Group, LLC and former Executive Director of the Ohio Business Development Coalition will be sharing new research and perspective on new ways to measure community success. Ed is a place marketing and branding expert working to advance the field of economic development.

The lunch keynote speaker on Day One will be David Trebing, General Manager, Sales and Local Relations of Daimler. Daimler is a global automotive company with headquarters in Stuttgardt, Bade-Wuttemberg, Germany. In 2012, Daimler sold 2.2 million vehicles and employed a workforce of 275,000 people.

Day One also features two site selection experts who will share their perspectives on how communities are evaluated as potential locations with a particular focus on the evaluation process for regional labor pools.

September 17^th kicks off with breakfast and two special presentations on how data can measure and drive innovation as well as how new and better tools can facilitate better decision making and planning in workforce development.

This is just a snapshot of the complete agenda of this not-to-miss event, and registration is now open. For more information and to register, visit the conference page of the Chmura website.

In the region-to-region battle for jobs and investments, having a postsecondary training pipeline aligned with industry needs is a nice competitive advantage. When examining postsecondary awards data for engineers, for example, it is easy to see inequalities in the system that can contribute to shortages or surpluses in some regions of the nation.

In the 2011-12 academic year, an estimated 113,742 awards were granted in the United States that flow into careers in engineering occupations. (An aside: Chmura Economics & Analytics models the complex interaction between graduate supply and occupation demand. Through this model, every award is linked to an occupation for which it provides training. The occupation awards data cited here are the product of this modeling.) The map below shows the production by state for all engineers as well as five specific types of engineers—use the dropdown box to update the map.

Awards for Engineering Occupations, 2011-12

Originally published on July 8, 2013 in the Richmond Times Dispatch.

Many high school graduates and rising high school seniors are making plans that will impact their work-related opportunities when they graduate from college.

While interest is certainly an important component of career choice, it should be balanced with job opportunities.

Photographers and actors are two careers that high school students think about, but job opportunities are scarce in those fields.

Based on estimates from Chmura Economics & Analytics, 215 photographers work for firms in the Richmond area along with another 363 who are sole proprietors.

On the other hand, an average 538 registered nurses are needed each year in the metro area to fill new jobs or those vacated by retirees or people moving to another occupation.

Along with nurses, accountants and bookkeepers are among the top 10 occupations needed by businesses in the Richmond metropolitan area over the next decade.

Another factor that might help students narrow their career choice is potential earnings.

The State Council of Higher Education for Virginia recently started providing the average first-year earnings (based on the last five years) by degree level along with the earnings by institution where the degree was awarded.

This database consists of graduates employed in Virginia and is not adjusted for the regional cost of living.

There is significant variation by degree and even for the same degree awarded at different institutions.

Registered nurses with a bachelor’s degree earned an average $48,959 for their first year working in the state. Graduates from the University of Virginia at Wise earned $37,492 – at the low end of the scale – compared with $54,765 for Jefferson College of Health Sciences graduates.

In some cases, the skills acquired with a two-year degree earned more than those with a four-year degree.

A graduate with an associate accounting degree made $30,964 for the first year and an electrician with two years of education commanded $36,734.

In contrast, graduates with a photography bachelor’s degree earned $23,035 in the first year while general English majors earned $23,423.

Virginia is only one of a handful of states that compiles earnings by degree and institution. CollegeMeasures.org has packaged the information and made it available in an easy-to-navigate website for students who are trying to decide on a career.

Later this summer, State Council of Higher Education for Virginia plans to make even more information available to the public: average student debts of graduates by program and institution.

With this information in hand, students can consider the debt-to-earnings ratio they may face when they are handed their degree.

Originally published in the Richmond Times-Dispatch on May 13, 2013.

The unemployment rate in the Richmond metro area drifted down to 5.6 percent in March.

While that rate is better than the national average of 7.6 percent, the local economy has a way to go before it is fully recovered from the recession.

Employment in the Richmond metro area stood at 628,800 in March — still about 6,600 jobs below the peak of 635,400 jobs in August 2007.

Based on the pace of employment growth in the region during the past year, we should exceed that peak before the end of the year. That job recovery is better than the for nation, which isn’t expected to reach the previous employment peak until July 2014 based on recent growth.

The prolonged recovery from the recession means new college graduates will again face a tight labor market.

Their ability to find a job, however, will vary greatly based on the knowledge and skills they acquired in high school or college.

New graduates hoping to work for professional business services firms might have a hard time finding jobs because those industries are still contracting in the Richmond metro area. For instance, two of the region’s largest law firms reduced employment over the past year, according to the Top 50 list of the area’s largest private employers.

Prospects are much better for new graduates with skills needed in the health care sector.

A little more than 1,600 new health care jobs were added to the metro area during the year ending in March, according to estimates from Chmura Economics & Analytics. Eight of the employers on the Top 50 list are health care related.

Looking ahead, Chmura Economics & Analytics is forecasting a need for an average 2,600 health care workers a year during the next decade in the Richmond metro area.

Of that amount, about 1,000 health care workers are needed annually to fill positions from which people have retired or moved to new occupations.

Even construction is looking promising again. This sector added 1,645 jobs in the Richmond region in the 12 months ending in March, according to the Virginia Employment Commission.

Along with a moderate amount of on-the-job training, cabinetmakers or drywall installers can make an average of about $30,000 in the region, according to the Bureau of Labor Statistics. The average wage of electricians in the Richmond area, which typically requires an apprenticeship, is about $46,000.

Based on our forecasts, next year’s college graduates will see further improvements in the jobs market.

And those students who choose a career path linked to jobs that are in demand by regional businesses will clearly have better prospects upon graduation.

Governor McDonnell Ceremonially Signs Virginia's Historic Bi-Partisan Transportation Funding Bill
– Legislation Provides Over $3.4 Billion in Statewide Funding, $1.5 Billion for Northern Virginia, and $1 Billion for Hampton Roads Over Next 5 Years Alone –

~Reduces Prices at the Pump While Providing Virginia's First New Dedicated, Sustainable Revenue for Transportation in 27 Years~

~At Signing, Governor Announces New Chmura Economics Report Finding New Spending on Construction Will Annually Sustain 13,058 Jobs and Have $9.5 Billion in Economic Impact~

***McDonnell: "This may technically be transportation legislation, but at the end of the day, it's a jobs bill."***

RICHMOND - Today, surrounded by legislators and community and transportation leaders from across the Commonwealth, Governor Bob McDonnell ceremonially signed Virginia's Road to the Future (HB 2313), the state's first comprehensive transportation funding plan approved in 27 years. Following on the heels of nearly three decades of inaction on the critical challenges facing transportation funding in Virginia, this historic bi-partisan legislation supported by Republicans and Democrats from each chamber will provide more than $3.4 billion in additional statewide transportation funding, more than $1.5 billion in additional funding for Northern Virginia, and more than $1 billion in additional funding for Hampton Roads, over the next five years alone.

"For 27 years our citizens have sat in traffic as congestion has increased and our bridges and roadways have deteriorated," said Governor McDonnell. "For 27 years our citizens and businesses have demanded solutions. For 27 years, Democrats and Republicans in the General Assembly failed to reach an agreement on this critical issue. However, we stand here today, thanks to the leadership and support of Speaker Howell and a broad bi-partisan coalition of legislators, business leaders and citizens, to celebrate this historic achievement. Not only will this legislation address both the short and long-term funding needs of our transportation system, it will also annually sustain 13,058 new jobs, have more than $9.5 billion in economic impact, and improve Virginians' quality of life. Instead of sitting in traffic, our citizens will be able to spend more time with their families enjoying the many benefits this great Commonwealth has to offer. Most importantly, this legislation will ensure that Virginia's economy can grow in the years ahead, and that businesses will have the infrastructure they need to create the good-paying jobs Virginians deserve. This may technically be transportation legislation, but at the end of the day, it's a jobs bill.

"When we put forward our comprehensive transportation funding plan this year, we called for three fundamental changes to how Virginia funds transportation, all based on conservative fiscal policy. First, we called for a reduction or elimination of our dependence on an archaic, outdated gasoline tax in the decades ahead. Second, we called for tying future transportation funding to the far more sustainable sales tax. Third, we called for treating transportation like the true core function of government that it is, one essential to economic growth and job creation in our state. While the final bill was in some ways different than our original proposal, it met all three of the goals we established. The final product is the very essence of compromise in that this legislation has components some will like, and components others may dislike. That's the nature of any true compromise. Our success demonstrates that both parties - be it here in the Commonwealth or up in Washington - can still achieve a great deal when partisan differences are put to the side and we work collaboratively toward the solutions our citizens demand. This bill is crucial to the future growth of Virginia's economy, and this is a great day for job-creation in the Commonwealth."

Over the first five years, HB 2313 will:

• Generate more than $1.8 billion in additional funding for maintenance, thereby eliminating maintenance crossover transfers
• Provide $660 million in dedicated new construction funding, which, when combined with the elimination of maintenance crossover, will grow construction spending by more than $2.4 billion
• Increase funding for Virginia's transit providers by $509 million
• Provide more than $256 million in funding for intercity passenger rail, the first dedicated state funding for this vital service
• Generate additional revenue for Virginia's airports and seaports
• Generate annually between $272 million to $335 million in Northern Virginia and $172 million to $226 million in Hampton Roads for regional transportation priorities

Additionally, in his remarks, the governor today announced the findings of recently completed economic impact analyses conducted by nationally renowned firm Chmura Economics. The first analysis, which focuses on new roadway construction spending as a result of HB 2313, determined that the additional funds in the Commonwealth Transportation Board's Six-Year Improvement Program will have an economic impact of $8.1 billion and annually sustain 10,133 jobs from FY 2014 through FY 2019. The second analysis, which focuses on new transit and rail spending, determined that the additional funding provided to the Department of Rail and Public Transportation will have an economic impact of more than $1.4 billion support 14,625 jobs, or 2,925 jobs per year, between FY 2014 and FY 2018. The new dedicated intercity passenger rail funding will enable Virginia to extend passenger rail service to Roanoke within the next four years.

"This year, Republicans and Democrats put their differences aside, sat down at the table and demonstrated to our citizens that unlike Washington we are able to work together to achieve the results they demand," said Speaker of the House Bill Howell. "I applaud Governor McDonnell for his leadership and willingness to tackle the difficult challenges facing Virginia, and I thank the broad bi-partisan group of legislators and stakeholders who made today possible."

Speaking about this historic legislation, Marty Nohe, Prince William County supervisor and chairman of the Northern Virginia Transportation Authority said, "Years of inaction in the General Assembly have resulted in Northern Virginia now being ranked as part of the most congested region in the United States. No other singular issue has as great an impact on our ability to attract and retain economic development opportunities and jobs. Now, with the passage of this historic compromise, the local governments in Northern Virginia will be able to work collaboratively to address our critical regional needs so that we can remain economically competitive and improve our citizens' quality of life."

"As home to one of the largest naval installations in the U.S. and the economically crucial Port of Virginia, the Hampton Roads' region has for years struggled with our unique transportation challenges," said Hampton Mayor Molly Ward, chair of the Hampton Roads Transportation Planning Organization. "Our region's infrastructure needs are tremendous and with the inclusion of the Hampton Roads regional component, HB 2313 will finally provide us with the foundation to begin tackling these difficult challenges."

"Following on the heels of the 2011 bond package, Governor McDonnell made a promise to continue his successful efforts to address Virginia's transportation funding needs by putting in place dedicated, sustainable revenues for the long-term," said Virginia Transportation Construction Alliance Executive Vice President Jeff Southard. "This year the governor delivered. Not only will this legislation improve mobility, reduce congestion and promote further economic activity, but it will put in place the sustainability necessary to build upon and continue the progress Governor McDonnell has made over the past three years."

Following General Assembly approval of the governor's recommended amendments, HB 2313:

• Eliminates the 17.5 cents per gallon excise tax on gasoline and diesel fuel
• Replaces the motor fuels tax with a 3.5 percent sales tax on the wholesale price of gasoline and a 6 percent sales tax on the wholesale price of diesel fuel
• Increases the state and local sales and use tax from 5 percent to 5.3 percent
• Partially eliminates the 2 percent motor vehicle titling tax exemption by increasing the rate from 3 percent to 4.15 percent
• Creates a $64 Alternative Fuel Vehicle fee to ensure that all drivers are contributing to Virginia's roadways
• Levies an additional 0.7 percent local sales tax, a $0.15/$100 Grantor's Tax, and a 2 percent Transient Occupancy Tax in Planning District 8
• Levies an additional 0.7 percent local sales tax and a 2.1 percent fuel sales tax in Planning District 23

A final summary of the HB 2313 and the Chmura economic impact analyses can be found at:http://www.varoadtothefuture.com/.

The golden ticket for most economic development programs is job creation, and the more the better. For folks involved in workforce development, the perfect job would provide a sustaining wage for individuals and families. This ticket has been hard to come by for many communities as the nation’s economy limps forward, offering little in terms of opportunity for a large portion of job seekers in the middle. Chmura’s economists took a look at more than 800 occupations, analyzed employment growth and wage gains that occurred between 2001 and 2011, and identified a few trends that help us understand where the jobs are (and where they aren’t).

We broke occupations into ten groups based on employment and wages earned and analyzed each decile based on job and wage growth. The results demonstrate two troubling facts. First, wages have been mostly stagnant during the ten-year study period, with gains exceeding inflation for only occupations on the high end of the scale. Second, job growth has been mostly isolated to those jobs paying the least and those that pay the most.

Over the past ten years, employment growth has been negative for occupations in the middle and it’s a substantial middle, representing more than 60% of the total jobs and wages. The data suggest it’s one part of the explanation for the skills gap – those who lost jobs in the middle may be unwilling to accept a position that pays less than their previous job and unable (because of skills and experience shortfalls) to successfully compete for jobs at the higher end of the scale.

Chris Chmura joined a distinguished panel in Washington DC on Sunday, April 14th to kick off the International Economic Development Council’s Federal Economic Development Forum. The plenary session, entitled “Workforce Development: If You Train Them, Will They Come” set the stage for a lively discussion around the importance of workforce development, the ever-changing needs of business and industries, and how the federal agenda may help shape the intersection between the two.

Big on almost everyone’s mind was the topic of the nation’s skills gaps, broadly defined as the mismatch between the skills and qualifications of the labor force and employers workforce needs. Chris’ remarks offered a unique perspective and practical advice on how economic developers can better understand and harness the power of their regional workforce (and workforce systems) to improve their economic development outcomes.

Chris shared specific examples and data supporting the need to better align economic development and workforce development strategies. She also underscored the importance of developing a deeper understanding of regional labor markets and external market forces to point to new, unexplored opportunities or mitigate risks for communities.

Other notable panelists included Jane Oates, Assistant Secretary of Employment & Training Administration, who shared her view of economic development and workforce development as synonymous—the public workforce system role is to help people connect to jobs.

Mary Jo Waits, Director at the National Governor’s Association Center for Best Practices pointed out three best-practice models where businesses are successfully working together to drive change: the Commonwealth Center for Advanced Manufacturing in Virginia, Clemson University’s International Center for Automotive Research, and Kentucky’s Automotive Technical Education Collaborative.

Karin Norington-Reaves, CEA of Chicago Cook Workforce Partnership, spoke of the need for workforce investment boards to make a paradigm shift from social service delivery to business service delivery. She now has 7 employees in her new business relations and economic development group that are focusing on 40 occupations with the greatest needs.

Also on the panel was Peter Cappelli, with the Center for Human Resources at the Wharton School. Mr Cappelli was not as confident a skills gap exists at all and called on employers to renew investment in training and skills transfer in their organizations.

The IEDC Federal Forum is an annual event providing opportunity for the economic development community to get educated and advocate for federal policies that will encourage and support economic growth. You can view Chris’s entire presentation here.

The Chmura team recently attended the 2013 National Association of Workforce Boards Forum held in Washington DC.  The event was well-attended by both public and private sector organizations including workforce development agencies, their board leadership, key staff members and community partners such as economic developers, educators, businesses, and elected officials. This year’s big buzz was around businesses-critical and ever-changing need for talent. Workforce Investment Boards and others are talking, now more than ever, about their need to become more relevant to the business community.  To accomplish that, thought leaders are placing a lot of emphasis on the importance of quality, insightful labor market data to shape the strategic direction for WIBs.  Even more exciting was the conversation around the need to connect workforce planning with the larger regional goals of the communities. 

This year’s theme “Dialogue for Workforce Excellence” got to the heart of the matter and the need for workforce development agencies to innovate and deliver relevant programs to support the needs of business and industry.  One speaker built upon that by giving the audience a cautious reminder that “innovation has no value until a customer stands beside it.” The lunch speakers were characteristically amazing and included the inspirational Bill Strickland, President and CEO of Manchester Bidwell Corporation and the insightful Jim Clifton, Chairman and CEO of Gallup. Jim remarked that customers create jobs and not vice versa. 

We met hundreds of passionate professionals, learned a lot and relished the opportunity to share our own labor marketing information solution, JobsEQ. Thanks to those who stopped and chatted with Chris Chmura and Leslie Peterson at our booth. 

We hope you’ll take an opportunity to check out the NAWB Forum 2013 program site (post-conference material is available now) and leave you with the following ruminations.

• Collaboration is no longer an option—it’s the new normal.
• Leadership is critical and the only way to affect real change in systems.
• Passion without planning is like nailing JELLO to a brick wall.
• Technology and big data has the potential to transform the way WIBs operate and affect change in their communities. 

We’ve got an incredible opportunity to get this one right and we’re committed to contributing to the solution. 

The topic of sequestration is on everyone’s mind today and the nation’s legislators are faced with some tough decisions. Sequestration, by definition, refers to automatic across-the-board spending cuts that will take place if a budget deal isn’t cut by tomorrow.

While many state and local officials are putting pencil to paper to see how the cuts will affect them directly, it’s important to remember that the federal government spends more than $500 billion each year through contracts with private industry in the United States. These funds make their way into regional economies as the federal government procures goods and services, supporting businesses and jobs.

So which metro area economies are most dependent on revenues derived from contract work for the federal government? Which ones are most at-risk due to the impending budget cuts? We took a look at federal contract spending data and assigned it a metro geography based on where the awarded firm performed the work. Then we divided that amount by the total number of jobs in each region.

The interactive map below shows how federal contract dollars are concentrated in the nation’s 369 metro areas. At the top of the list is the Pascagoula, MS, a small metro area with businesses employing about 55,000 people. Pascagoula is home to naval shipbuilding giant Ingalls Shipbuilding, which was founded there on the banks of the Pascagoula River in 1938. Ingalls is one of Mississippi’s largest employers. Over the past three years, federal contract spending has averaged $3 billion a year in Pascagoula. That’s more than $54,000 federal dollars spent locally for each job in the metro area.

Will sequestration happen? That remains to be seen. It’s safe to say federal spending will be reduced in the future, perhaps with a bit more surgical precision than sequestration mandates. Regions should understand their exposure as it relates to these issues and be prepared to support businesses (and employees) who could be impacted.

You can download the full list here.

The Top 10 Metros Area by Federal Contract Concentration

You can download the full list here.

Each of Ohio’s nine target industries added employment¹ in 2012 and five of the nine sectors posted job growth far stronger than Ohio’s overall job growth of 1.8% during the year. Target industry job gains were led by Ohio’s BioHealth sector, which mostly comprises pharmaceutical and medical equipment manufacturing, posting 14.1% year-over-year growth in the fourth quarter of 2012. The Energy sector also saw strong gains, due in large part to the development of Ohio’s shale gas reserves. What is especially impressive about the job gains in the BioHealth and Energy sectors is that these are two target industries where Ohio is only beginning to develop a competitive cluster—as gauged by the state’s location quotient.

The location quotient is measure of how big these industries are given the overall size of Ohio’s economy. In this case, a location quotient less than one indicates an industry that is underweight in terms of what one might expect given the overall size of Ohio’s economy. In this context, given Ohio’s assets and labor market strengths, there can be optimism that these two industries will continue to expand employment over the next three to five years and Ohio will see the location quotient in these two sectors move from below to above one. If the location quotient of these two sectors approached the average for location quotient all of Ohio’s target industries (1.53), this would translate into the creation of more than 80,000 new jobs.

In addition to the strong growth in Ohio’s target industries in 2012 was the fact that these job gains were spread out across the state. Seventy two of Ohio’s 88 counties experienced at least some job growth in these nine target industries. In fact, some of the strongest year-over-year job gains were in rural communities which saw Ohio’s target industries collectively growing in excess of 5%. Only about 11% of Ohio’s counties saw job declines in aggregate employment in these target industries. Similarly, in the BioHealth, Energy, Financial Services, Food Processing, and Information Technology sectors, more than 75% of all Ohio counties with these industries experienced job growth in 2012. The BioHealth sector expanded last year in 95% of the counties where it was present. In the more traditional manufacturing groups—Advance Manufacturing, Automotive, Aviation and Aerospace, and Chemicals and Polymers—the employment gains were slightly more concentrated with only about two-thirds of Ohio’s counties registering employment gains in these sectors. Employment changes were the most mixed in the advanced manufacturing sector which registered job gains in 52 counties, but job losses in 34 counties.

Chmura’s economists have been working with local communities for nearly a decade to understand the sources of their local competitiveness and strengths of their key industrial clusters. Several techniques exist for this type of analysis and one commonly utilized component is to examine an area’s key clusters for missing links in the supply chain. Many times this helps for marketing campaigns or economic gardening efforts in order to attract firms or spur entrepreneurial activity to address these gaps and augment and strengthen an existing industry cluster. In many cases, the search for supply chain gaps utilizes national models of what an industry and its many sub-industries have in common. Where additional data are available or can be collected, an alternative methodology can be used for much greater specificity, particularly when the local industry cluster has very specific suppliers or itself is part of a very complex value-chain from start to finish. Always looking to innovate, Chmura has produced a unique way to map the actual supply chain of industry clusters utilizing cutting edge network analysis. The results speak for themselves in an unprecedented, granular look at economic leakages, supply chain gaps, and cluster synergies.