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© Copyright 1998 by the Wyoming Department of Employment, Research & Planning

Teton County would be considered at full employment (i.e., operating at full potential output and where the unemployment rate is equal to the natural rate) at around three percent unemployment. This natural rate of unemployment can fluctuate over time and will be different for each county and the state as a whole. An economy going below the natural rate of unemployment causes inflationary pressures on wages, as explained above; this theory works well for labor deficit areas where individuals are moving and/or commuting to the area to work. One underlying problem with this theory develops when there is a labor surplus and the labor force is leaving an area.

At the national level, the U.S. has never experienced an out-migration. The U.S. has always experienced in-migration since its inception, so when unemployment rates and jobless claims go down it is always a good sign for the economy. At the state or local level, when unemployment rates and jobless claims go down it does not necessarily mean the economy is doing well. For example, in 1997 the Wyoming unemployment rate was at 5.1 percent and jobless claims dropped from the previous year (see "1995 - 1997 Wyoming Local Area Unemployment Statistics).

However, this is not due to a robust growing economy in Wyoming; it is due to an out-migration of population and labor force because of a labor surplus in Wyoming and a labor shortage and higher wages in neighboring states (see the Table and the Figure). Typically, businesses in labor shortage areas will recruit new employees from outside their labor market or will relocate starting new businesses in labor surplus areas to attain the number of workers required and at lower wages. In 1997, Wyoming experienced the recruitment phenomenon and to some extent in 1998 is starting to see the relocation of new businesses to Wyoming seeking the workers they need. The labor force and population outflows from the state have disappeared in 1998, showing that Wyoming has reached equilibrium.

Labor shortages and surpluses can also show up in particular occupations across geographical and industry sectors. For example, the excess demand for labor and a labor shortage for computer programmers/systems analysts occupations shows up with an increase in wages across geographical boundaries and industry sectors (please refer to "High-Tech Industry in Wyoming" in the February 1998 issue of Trends). National wages for these occupations average $24 to $25 per hour while state wages average $18.50 per hour (please refer to the R&P publication: Wyoming Wage Survey 1996) and are increasing rapidly.

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