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Some educational effects on employment

Since the end of the Great Recession in June 2009, labor markets have improved dramatically. National unemployment rates have fallen from 10 percent to 4.9 percent. In no small part, this has been driven by the roughly 10 million new jobs created. Even so, labor market improvements haven’t been evenly distributed across the U.S. population: Those with higher levels of education have done much better than those with lower levels.

The graph shows the total, post-recession change in employment for workers over 25 years of age grouped by level of education. In the first year after the recession, few if any new jobs were created for anyone, regardless of education. After the first year, jobs steadily increased for those with a bachelor’s degree or higher. And it took another year for labor markets to improve for those with some college or an associate’s degree.

Unfortunately, the same cannot be said for those with, at most, a high school education. Since the end of the recession, these individuals continue to experience no net job growth. Labor markets have not improved for everyone.

How this graph was created: Search for “Employment Level” and select the following tags (in the left sidebar): “education,” “25 years +,” and “sa.” Select the four series and click “Add to Graph.” Edit the range of the graph to start in June 2009 using the controls in the top right-hand corner or the sliding bar below the graph. Because we want to see how employment has changed since the end of the recession, we need to change employment levels to cumulative changes in employment since June 2009. Here’s how we do that: For each series, find the June 2009 value and subtract it by using the “Create your own data transformation” field: For example, for “Employment Level: Bachelor’s Degree and Higher, 25 years and over,” the June 2009 value is 43,362; so you will apply the formula a-43362. After transforming each series, if the y-axis title and y-axis labels overlap, reduce the general font size in the “Graph Settings” menu.

Suggested by Michael McCracken and Joseph McGillicuddy.

View on FRED, series used in this post: LNS12027659, LNS12027660, LNS12027662, LNS12027689

St Louis adds 15,600…no, wait…22,400 jobs in 2015: Be aware of data revisions

When the Bureau of Labor Statistics (BLS) released the latest state and local employment data on March 14, 2016, the story of recent job growth changed for many parts of the country. Here in St. Louis, the local economy has about 20,000 more jobs than previously estimated.

Data revisions occur because counting new jobs is a difficult process that relies on samples and advanced statistical techniques. As more information becomes available, data are revised. Estimating smaller geographies is especially difficult: Revisions are less frequent, but their magnitude can be more substantial than for larger areas.

The BLS uses the monthly Current Employment Statistics (CES) survey to estimate local employment for nonagricultural industries, but the best source of local employment statistics comes from their Quarterly Census of Employment and Wages (QCEW). The QCEW includes data derived from establishments’ reports to the various unemployment insurance programs that are released with about a 6-month lag. Every March, the BLS reconciles the CES estimates with the data from the QCEW, which can result in significant revisions, as we’ve seen here in St. Louis.

The top graph shows the St. Louis MSA’s total nonfarm employment before and after the BLS completed its revision. Job growth had been underestimated by close to 20,000 jobs over the two-year period. Perhaps surprisingly, this upward revision was predictable: The QCEW had been growing at a much faster pace than the CES for much of the period, and stronger growth was reported across many industries as the BLS revised employment upward for the majority of industries in the MSA.

Not every industry’s revision was positive. Employment in transportation and utilities (shown in the bottom graph) seemed to be growing at a rapid pace from late 2014 through the end of 2015. But the revision reduced reported employment in the industry by close to 10%: from 53,300 down to 49,600. It’s common for revisions to have a significant effect on industries in a region, as the initial data simply don’t allow sound employment estimates. Knowing whether or not the data have been revised is important when deciding if you should take the number at face value or with a grain of salt.

How these graphs were created: The St. Louis Fed maintains records of all data revisions in its ALFRED® database, which allows you to retrieve vintage versions of data that were available on specific dates in history. On the “All Employees: Total Nonfarm in St. Louis, MO-IL (MSA)” page on FRED, click on “Vintage Series in ALFRED” on the left sidebar to retrieve the two most recent releases, which currently include the revision. Under the Graph / Graph Settings tab, change the graph from bar to line and select other release dates. This will create the top graph. Follow the same general process to create the bottom graph.

Suggested by Charles Gascon and Paul Morris.

View on FRED, series used in this post: SMU29411804300000001SA, STLNA

Tracking more Fed policy tools

Those outside the Fed often cite the federal funds rate as the only tool in the FOMC’s monetary policy toolbox. But there are more—a fact first demonstrated when the FOMC employed “non-traditional” policy instruments in its successive quantitative easing programs, all of which involved purchasing some assets. As the FOMC has started to increase the federal funds rate target from near zero, it has also made clear that it can also use two other interest rates to set monetary policy: the interest rate on required reserves and the interest rate on excess reserves. FRED has recently added data on these two rates so users can track how these policy instruments are evolving.

The graph above shows these three rates: the federal funds rate target, which has an upper and lower limit to its range, and the two rates on reserves. At this point, there’s not much to see, as the rates on reserves currently coincide with the lower limit of the federal funds rate target and have done so for some time. But these rates need not follow the same path. In fact, the FOMC may implement policy by adjusting one or more of these rates if necessary.

How this graph was created: Search one by one for the four series and add them to the graph. For a shortcut, search for the series IDs: IORR, IOER, DFEDTARU, DFEDTARL.

Suggested by Christian Zimmermann

View on FRED, series used in this post: DFEDTARL, DFEDTARU, IOER, IORR

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