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Report: Missouri unemployment shrinks as poverty grows

January 10, 2015 at 6:00 a.m. | Updated January 10, 2015 at 6:00 a.m.

Unemployment in Missouri is decreasing, but poverty continues to grow, according to a report released recently by Central Missouri Community Action (CMCA).

The CMCA 2014 Community Assessment examines demographics, along with needs and trends of Cole, Callaway, Boone, Moniteau, Osage, Cooper, Howard and Audrain counties. The data were gathered from a survey of 373 low-income families in the eight counties, a public survey of 782 random individuals, CMCA self-assessments and compiled reports from various research and data systems.

The survey shows, from 2000-12, the population for six of the eight counties has increased, with Howard and Audrain counties' dropping. From 2000-09, the poverty rates increased in all eight counties, then increased again from 2009-12 in seven of the eight, with Moniteau County the exception.

However, the overall unemployment rate for the area, 5.4 percent, is lower than the state average 6.5 percent, according to the report. And the U.S. Bureau of Labor Statistics (BLS) also ranks Missouri's unemployment rate at 6.5 percent, which is less than the national average of 7.4 percent.

"Even though individuals are going back to work, the jobs they are working are lower-paying positions," said Sarah Nichols, community organizer for CMCA. "Quite a few manufacturing jobs closed, so you had a lot of individuals out of work.

"People are going back to work after losing jobs, and accepting any job they can get."

The decrease in unemployment numbers is reflected in a national trend, according to the BLS.

Unemployment rates decreased in 43 states, increased in two and stayed the same in the remaining five. The U.S. jobless rate declined 0.7 percent last year. The Labor Force Participation rate also has been decreasing, from 66 percent in 2004 to around 63 percent now, according to the BLS data.

Each of these measurements - unemployment, labor force and jobless rates - looks at different factors. The BLS defines "unemployed" as those who are jobless, looking for a job and available for work. They define the "employed" as anyone with a job, and the "labor force" consists of the unemployed and employed together.

So the number of people looking for work is decreasing, as well as the number of people who are working and able, according to BLS.

Also, the use of ratios and percentages can be misleading to the actual size of the claims.

For instance, that 0.7 percent decline in joblessness represents more than 2 million people who now may be employed.

"You can have these unemployment rates falling and still have poverty increasing for several reasons," said David Mitchell, director of Missouri State University's Economic Research Bureau. "Most people think the unemployment going down is good, and up is bad, but the numbers can be affected by people who are leaving the work force for retirement just as much as they are by people finding a job."

The unemployment rates do not take into consideration people who have left the workforce but no longer are seeking employment, Mitchell said. This includes discouraged job hunters, retirees, the disabled, stay-at-home parents and more.

These factors can impact poverty as well, he said.

"One of the things I am concerned about is wages in Missouri have not been rising - they have been stagnant," Mitchell said.

He explained the consequences of lost jobs and pay cuts during the recession are still reverberating in today's post-recession economy.

Mitchell gave three examples of how the recession affected wages and poverty levels:

The first is an aging employee two years away from retirement (A), the second is an employee in the middle of a career (B), and the third is a college graduate about to join the workforce (C). The recession hits, and all three get lower wages.

• The elder employee, A, is laid off and, instead of looking for another job to fill two years of time, he or she decided to retire early. Retiring early has as bad of an effect as retiring later has a good one, Mitchell said. This means for the rest of employee A's life, he or she will miss out on the benefits that would have been gained had A continued to work the two years, with one benefit being a larger income.

• The second employee, B, also is laid off and decides to cease looking for work and capitalize on the disability benefits for which he or she qualifies. These benefits do not pay as highly as the previous employment, so he or she now is earning less and adding to poverty rates.

• As for the college graduate, C, graduating during a recession enters that person into a workforce with generally lower wages. This puts him or her on a growth path with lower wages, compared to someone who graduated after the recession and was hired when wages were higher.

All three situations can affect the levels of unemployment and poverty.

The CMCA report states the gap between education attainment and available jobs prevents low-income individuals from qualifying for work, but also Central Missouri has many ways and opportunities to confront causes and conditions of poverty.

"I think that we are seeing people get back to work - it is an assumption that a lot of people are not seeking work, but I don't know that there is any proof to that," Nichols said. "There is a really big divide between low income and high income in Cole County, and although there are a lot of jobs available, a lot of them are low-paying or low-wage jobs."


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