On Tuesday, as he has done in recent months, John Bel Edwards touted the latest drop in Louisiana’s unemployment rate as evidence that his stewardship of the state is putting lots of people back to work.
In announcing a 4.6 percent rate in December, Edwards said, “Louisiana’s economy continues to improve, and we are making tremendous progress in putting our people back to work."
What Edwards didn't mention on Tuesday is that, despite the sharply lower unemployment rate, the number of employed workers in Louisiana in December — when the latest figures were released — was up only slightly compared to when Edwards took office in January 2016.
Moreover, the unemployment rate has dropped just as much, if not more, in neighboring states, although nationally Louisiana has dropped from the 46th highest unemployment rate when he took office to 37th in December.
More broadly, economists question whether the state’s top elected official can claim credit for such trends. As Jim Richardson, a longtime LSU economics professor, put it: “Governors have little control over the number of people employed in the labor force over the short term.”
Richardson and other economists say the total number of employed workers in the state is a more important measure than the unemployment rate.
“When people are working, they are able to buy things, they’re paying income taxes, they’re paying excise and sales taxes on things they buy,” Richardson said.
On the employment scorecard, Louisiana has barely gained more jobs during Edwards' tenure, though the trend since August is on the upswing.
In January 2016, total civilian employment was 2,008,483. In December 2017, it was 2,019,587. That means only 11,104 more people held jobs, an increase of about half of 1 percent.
Since Edwards took office, the unemployment rate has indeed declined from 6.2 percent to 4.6 percent.
But that’s mostly because the number of workers in the civilian labor force has dropped, from 2,140,755 in January 2016 to 2,116,924 in December, a reduction of 23,831. In mathematical terms, the denominator is shrinking about as fast as the numerator.
“You have people leaving the state, retiring or just leaving the labor force,” said Richardson.
Economists say that growth in the number of jobs indicates a healthy economy, while a lower unemployment rate, although typically hailed by elected officials, may actually reflect that some workers have left the labor pool — as has happened in Louisiana.
The decline in the state’s oil and gas industry — because of a drop in the price of oil, over which the governor has no control — might explain why fewer people are seeking work now than when Edwards became governor, said Richardson.
Louisiana was one of just eight states that saw its population drop last year – after thousands of people moved to other states, new Census fi…
Steven Sheffrin, an economist and executive director of Tulane University’s Murphy Institute, said he believes the shrinking labor market here results from people leaving.
Indeed, Louisiana was one of just eight states that lost population in 2016, as an estimated 25,000 residents moved elsewhere, the U.S. Census Bureau announced in December.
Sheffrin noted that payroll employment increased in Alabama, Georgia, Florida, Tennessee and Mississippi from January 2016 to December 2017, according to the Federal Reserve Bank of Atlanta, even as it dropped slightly in Louisiana.
The unemployment rates in those states have dropped comparably to Louisiana’s, Sheffrin also noted. Alabama’s rate, for example, declined from 6.1 percent to 3.5 percent, while Mississippi’s dropped from 6.1 percent to 4.6 percent.
Edwards has not mentioned neighboring states in his news releases on the continued unemployment rate decline in Louisiana.
The statement from the governor's office noted that the unemployment rate in Louisiana has dropped for eight months in a row.
"These unemployment figures are evidence that we are headed in the right direction, but I know we still have a lot of work left to do," the statement said.
About 45,000 more workers had jobs in December than in August, so the state is on an upturn. In November, Edwards announced that DXC Technology, one of the world's biggest technology companies, will open a New Orleans office early next year and plans to eventually employ 2,000 workers. Louisiana Economic Development, a state agency, offered DXC an incentive package valued at about $115 million.
One of the world's biggest technology companies will open a New Orleans office early next year that will eventually employ 2,000 people, offic…
Edwards has trumpeted several other new plant openings from investments that began under Gov. Bobby Jindal, without mentioning his predecessor.
His news releases also have highlighted top rankings for the state from business development magazines, marks first earned under Jindal — again, without mentioning his predecessor.
Edwards, of course, is hardly the first governor to claim credit when the state’s unemployment rate drops or when companies announce splashy investments. Likewise, governors typically remain silent when the unemployment rate rises or blame others when companies announce big layoffs.
But the real story is how little impact governors have on the state’s overall economy, said Greg Albrecht, the Legislature’s top economist, echoing Richardson. “We have to balance our budgets, so we can’t create more of the economy through deficit financing,” he said. “We can’t affect trade flows through tariffs. States in general don’t have the tools to do macroeconomic policy.
“If you build up a super-strong education system, you’ll have an impact on your economy long term, or a strong road system. But it won’t show up next year. That’s not what states can do.”
Edwards has stopped the budget cuts to the state’s colleges and universities enacted by Jindal and the previous Republican-controlled Legislature, though he has not been able to restore funding to anywhere close to pre-Jindal levels. He has sought, unsuccessfully so far, to win approval for higher gas taxes to improve the state’s road system, in the face of Republican opposition.
Richardson agreed with Albrecht on the notion that a governor’s impact on the state economy is generally limited, especially in the short run.
A governor, Richardson said, has the “ability to affect employment over a long term through creating a good business environment, good public services and encouraging businesses to come here. In the short term, the global economy and the national economy are much more important, or specific factors in a specific industry, such as oil and gas.”
The U.S. unemployment rate declined from 4.9 percent in January 2016 to 4.1 percent in December 2017, while the European Union dropped from 8.9 percent in January 2016 to 7.3 percent in November.