Is the UC nearing full employment?

UPPER CUMBERLAND – Pockets of the Upper Cumberland dipped under 5 percent unemployment in January as jobless rates continue to drop significantly year-over-year. But does that mean the region is nearing what’s considered “full employment,” meaning there’s a job for everyone who wants one?

Maybe but maybe not. The Federal Reserve considers a base unemployment rate of 5.0 to 5.2 percent as “full employment.” Most economists, meanwhile, place that rate in 5.0-5.5 percent range.

If that’s the case, six UC counties – nearly half the region – would be considered at full employment, including Macon (4.3), Warren (4.6), Smith (4.7), Cannon (4.8), Putnam (5.0) and White (5.0).

But, said Henry Bowman, an analyst with the Upper Cumberland Development District, there are inherent problems in estimating local unemployment rates. And jobless numbers are still higher, but falling, in the remaining counties, including DeKalb (6.0), Jackson (6.8), Cumberland (7.1), Van Buren (7.2), Pickett (7.8), Clay (7.9).

Overton (6.3) and Fentress (6.9) saw increases in January, albeit slight, 0.1 and 0.2 percentage points, respectively. The region overall fell just short of the “full employment” scope at 5.6 percent.

“Things are definitely better, but I wouldn’t call them ideal by a long shot,” Bowman said. “But I keep hearing things from employers like, ‘I can’t find workers.’ And of course we’ve got several developments in Putnam County in Academy and (Ficosa). The more competition heats up among workers, it will drive up the price, and some of the marginal businesses are going to have trouble.

“Things are looking up around here. Looking at other indicators, like the states tax numbers, they’re rolling along pretty well, too,” he added. “But, on the other hand, as economists like to say, the more remote areas of the region are still having problems.”

But, regardless, in just one year’s time, the region has seen a 2.2 percentage point drop in its unemployment numbers. The biggest swings came in Van Buren and Clay, which dropped 3.7 and 3.5 percentage points, respectively.

“There’s been improvement, there’s no doubt about that,” Bowman added. “But I’m not sure the improvement is as much as those numbers might incline. There’s a lot (of people underemployed); there’s a lot of people who’ve dropped out of the workforce.”

The UC is also still pacing ahead of the state. The unemployment rate for Tennessee was 4.9 percent in January, down 0.4 percentage points from December. The region was 0.7 percentage points higher for the month.

Nationally, the non-seasonably adjusted unemployment rate was 5.3.