Along with the geographic distribution of initial unemployment claims one of the other interesting aspects to examine is the distribution of the claims within the different occupational categories in North Dakota. One of the reasons this would be important from a policy perspective is that it provides some information about the degree of output lost that may not be recovered. To put it bluntly not all losses are permanent losses. The sales lost by a restaurant are unlikely to be recovered, at least in the way a manufacturer might put on extra shifts to make up for lost production time. In the same way a retail store may see a different timing pattern to purchases but over a longer period of time notice little to no change in the overall sales they make. As a result of these distinctions I looked at the sector location for the initial unemployment claims.
A large portion of the initial claims over the last three reporting periods come out of accommodation and food services. Unfortunately these are exactly the types of sales not likely to be recovered and the higher initial claims there would lead one to believe there would be larger losses to the economy as a result. Two other categories with higher losses include retail trade and construction but as was already mentioned the employment loss may be less indicative of a long run economic loss to firms in those sectors. This does not make the job losses painless to the economy or the individual, it merely points out that the timeframe under analysis may end up being a driver of the perceive severity of the issue. One category to look at going forward is the mining, quarrying, and oil extraction.
As Russia and Saudi Arabia engage in an ongoing price war the impact on shell oil production in North Dakota is a prominent concern. One of the early indicators of problems for the state economy, the state budget, and the oil sector in particular will be the unemployment claims coming out of that sector. Currently the initial claims coming out of oil are under 10% of total claims. It will be very important to see if and how that number changes going forward.
As discussions commence around state and local policies to bolster the economy as supplements to federal programs it’s important to keep in mind the geographic and occupational distribution of the initial claims to facilitate better targeting of policy and better alignment with overall goals.