OUR VIEW: Cautious optimism about local jobless rate

» Decrease in unemployment rate is probably good news, but not necessarily

Culpeper’s unemployment rate has declined for three consecutive months, according to the latest information available from the Virginia Employment Commission.

Now, there’s cause for celebration. Break out the champagne. The recession’s over. Right?

Not so fast.

While a decrease in the unemployment rate probably is a sign of a waning recession, it also could be a sign of despair. Here’s how.

An area’s work force is defined as the number of people who are employed plus those who are seeking employment. The unemployment rate is simply the percentage of the work force that is unemployed.

For the sake of a very simple example, let’s assume our work force consists of 1,000 people. Of those, 75 are unemployed, giving us an unemployment rate of 7.5 percent.

Let’s assume in the next month that there were a couple of layoffs, so we now have only 923 people employed. And seven of the unemployed people either got frustrated and gave up looking or left the area in search of employment elsewhere. Now our work force consists of 993 people, of whom 70 are unemployed. That gives us an unemployment rate of about 7 percent.

In our example, two people were laid off, nobody was hired and the unemployment rate went down.

You have to look at the unemployment rate in context. Back to reality, our decline probably is a good sign. It’s been sustained for a few months and it’s coupled with a decline in the state unemployment rate and a number of other positive economic factors.

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We’d like to congratulate some of the finest cabinet makers in the world — those at the local Merillat plant. IndustryWeek magazine named our facility one of 20 finalists for best plant in 2009. The winner will be announced at the magazine’s Best Plants conference, to be held in April in Cleveland. Good luck.