Lehigh Valley is about to enter its fourth tight labor market in 30 years

The number of initial unemployment claims, which shows the size of the newly unemployed in the Lehigh Valley is trending at 14% below its last year’s level as of April 2016. This indicator’s long-term trend has been in the range which is historically associated with tight labor market since last November. The last time this indicator dropped below its normal range was before the tight labor market of 2004. If this trend continues, this will be the fourth time in the last 30 years that initial unemployment claims has dropped and stayed below its normal range. The previous three were; 1987, 1998 and 2004. And in all these occasions when the number of initial unemployment claims dropped and stayed below its normal range, a tight labor market ensued.
During the worst days of the Great Recession the number of initial unemployment claims exceeded 8,000. It should be noted that the Valley’s labor market went from tight in October 2006, to flooded by March 2009. This caused a rapid increase in the number of newly unemployed in a short period of time, by far the worst labor market in the last 30 years.

The continuing unemployment claims, shows the number of people who are receiving unemployment checks due to loss of job in the previous months. This is a very good indicator of the locally available labor pool.
Continuing unemployment claims also rose rapidly as the unemployment rate sky rocketed in the Valley during the Great Recession. This index rose to around 90,000 which roughly translates to 40,000 people receiving unemployment checks by March 2009.

The Index of continuing unemployment claims is also trending well below its last year’s level. Roughly translating the index shows around 12,000 people received unemployment checks in April. During the same period there were more than 23,000 people in the Valley who were actively looking for a job, which means that there were also another 12,000 people looking for work in April without the benefit of unemployment checks.

Since the end of 2015, the Valley’s labor force has increased by 3,600 new job seekers, that is in 4 months, the local labor force’s expansion was equivalent to it annual growth in the years past. And this is good news since it indicates that more of the discouraged workers are coming back to the labor force.

While unemployment rate rose by close to one percentage point since last December, almost the entire increase in this rate was due to the expansion of the labor force.

Being a job seeker is rarely fun, however, if the current trends continue, this would be one of the best times in the last 30 years to be looking for a job. As we expect to see a lot more new entrants to the labor market as well as more wage increases as the Valley enters its fourth tight labor maker in 30 years.