Q&A – Florida’s Unemployment Rate Is Rising While Adding Jobs


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Today’s entry: Why does the unemployment rate occasionally rise when we’re adding jobs? I saw that happened again in Florida last month. Thanks.

Bottom Line: So yes, Florida, like the country as a whole saw a slight rise in the unemployment rate last month despite another solid month of job creation. According to the Florida Department of Economic Opportunity, a stout 81,300 jobs were added last month, once again bettering the country as a whole when adjusted for population. However, after dropping to a post-pandemic low of 4.8% two months ago, Florida’s unemployment rate has now risen for two straight months. So, what gives? How does this happen? 

First, it’s important to know what the unemployment rate, as measured, actually is. While logically it’s natural to assume that the “unemployment rate” reflects the number of people who’re unemployed who are in need of work. However, it actually represents those who’ve been unemployed for 26 weeks or less, who’ve been looking for work within the past month. The 26 weeks, while a terribly flawed metric for the purpose of citing a true unemployment rate, isn’t random. It’s tied to the maximum length of time one can spend on unemployment benefits without an extension of those benefits.

Now your question was why it can rise even as we’re adding jobs. This can happen in one of two ways. First, jobs added trail population growth/demand for jobs. Second, people who stopped looking for work for at least four weeks reengaging.

In the case of Florida’s, and the country’s recent jobs gains, the issue isn’t about jobs added trailing population growth, it’s about people reentering the job hunt. The timing, where we’ve seen the increase in the unemployment rate in Florida over the past two months isn’t a coincidence in Florida either. It was in May that Governor DeSantis said Florida would be ending the extended federal unemployment benefits in June. Not coincidently we saw job searches immediately spike from those who’d chosen to sit on the sidelines collecting a comfortable level of unemployment benefits. 

A May 28th report by Indeed showed a 5% increase in the number of people searching for jobs literally the day the announcement was made. This incidentally validated the actions of Governor DeSantis and 24 other governors who cut the cord to lure would-be workers back into the workforce. That’s how it happens, and it should help explain some of the inherent flaws with the base reported unemployment rate.

Each day I feature a listener question sent by one of these methods. 

Email: brianmudd@iheartmedia.com

Parler & Twitter: @brianmuddradio 

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