Fitch: Louisiana has top job growth amid significant labor force decline

Louisiana was the top job-growth state in October, according to Fitch Ratings, but the firm’s “adjusted” unemployment rate for Louisiana was nearly twice as high as the state’s official October unemployment rate of 5.4%.
Fitch-adjusted unemployment is a proprietary measure that reclassifies workers who have left the labor force as unemployed, the ratings agency said in its newly published Labor Markets Tracker report.
The measure is viewed as a more accurate statistic, analysts said, given mass labor exits during the COVID-19 pandemic and the U.S. Bureau of Labor Statistics’ (BLS) practice of not including labor force exits when determining unemployment rates.
“The labor force is made up of the employed and the unemployed. The remainder – those who have no job and are not looking for one – are counted as not in the labor force,” according to BLS.
Fitch is considered one of the “big three” credit ratings agencies in the U.S., along with Moody’s and Standard & Poor’s. The agency singled out October as an employment benchmark since every state, except Hawaii and Wyoming, recovered at least 50% of the jobs lost from the peak of the pandemic last year.
Louisiana led all states with 12% job growth when comparing October 2021 to October 2020. The growth rate was aided by strong economic resiliency in the wake of Hurricane Ida, a category 4 superstorm that slammed into the southeast part of the state Aug. 29.
“After historic job losses last spring, most U.S. states have seen sizable rebounds in employment,” the report said. “Louisiana’s full employment recovery from Hurricane Ida was immediate and strong, increasing above pre-Ida levels.”
The ratings agency added, however, Louisiana’s adjusted unemployment rate was 9.4%, which ranked 43 out of 50 states. The median Fitch-adjusted unemployment rate for all states was 5.9%, the report said.
“States with a larger percentage of those who left the labor force may suffer greater volatility in their unemployment rates as individuals seek employment after a period of not actively seeking work,” the agency warned.
An estimated 1,868,100 workers were employed in October, according to the Louisiana Workforce Commission, whereas BLS reported nearly 2 million workers in Louisiana in February 2020, or just before COVID-19 lockdowns led to mass job losses and business closures.
Fitch analysts estimated through October 2021, state labor forces had declined by 2.3 million workers since February 2020. November’s “weak” nationwide employment gains of 210,000 jobs also was a cause for concern, the report said.
“Labor force exits since the onset of the pandemic remain unusually high in most states relative to prior economic cycles, compounding the negative fiscal effects of job losses,” Fitch said.
Analysts added that employment recovery is a key factor for economic growth as well as tax revenue.
“The pace of the recovery for each state depends partly on how quickly workers who have exited can return to the labor force,” the report said. “Those who have exited the labor force are typically not generating taxable income or purchasing as many taxable goods and services and are more likely to require publicly funded social services such as Medicaid.”