November’s improved employment numbers should be a pick-me-up for advisors, at least for those who believe they have skin in the game where job growth is concerned.
The November unemployment rate fell to 7 percent for households (from 7.3 percent in October), according to the U.S. Bureau of Labor Statistics (BLS). In addition, total employment (nonfarm payroll) rose by 203,000.
Overall, job growth has averaged 195,000 per month over the prior 12 months, BLS reported.
Those changes suggest that family finances in some American homes will begin to ease. That could translate into increased ability of some customers to meet insurance premium payment obligations.
It could also spark increased consumer interest in making insurance purchases these customers previously delayed. In particular, insurance professionals who have customers in the industries seeing the most growth in jobs — transportation and warehousing, health care, and manufacturing — may start receiving more receptive welcomes than previously.
Insurance practitioners also can use the data when helping employers in those and other industries make decisions on benefits and other insurance. If employment is going up, the employer’s benefit and protection needs will increase.
These aren’t sure things, but they are possible things.
Another possible thing is that a rising-tide-floats-all boats marketplace may be in the making. If so, insurance demand likely will rise with that tide.
It will be a slow-rising tide, though, since disposable income, the expansion of which favors greater insurance sales, continues to fluctuate.
For instance, according to the U.S. Bureau of Economic Analysis, real disposable personal income decreased 0.2 percent in October, but it increased 0.4 percent in September and August (by 0.5 percent) and July (by 0.2 percent), after decreasing in June (by 0.1 percent).
But the increases are larger in percentage and occur more frequently than the decreases, so it’s a matter of slow being better than no.
Unemployment in insurance
A drill-down of the BLS figures points to another development meriting producer study. This is the improving unemployment trend in the insurance industry.
According to BLS, the unemployment rate in the industry was down in November. The rate dropped to 2.9 percent from 3.8 percent in October.
The industry’s unemployment rate was also down from January, when it was 4.7 percent, and down from the industry’s 10-year high of 8.4 percent in March 2010. (See table.)
The BLS table indicates that the insurance industry’s unemployment rate has not only declined over the past 11 months, but that the November rate of 2.9 percent is within industry norms for the first half of the 10-year period illustrated — i.e., before the Great Recession of 2008-2009.
Not everyone in business cottons to federal government statistics — because they are not in the moment, because they are so broad, because they use terms that don’t fit business needs, because they leave out certain categories and countless other reasons.
However, since BLS uses a mostly consistent approach for its data gathering from year to year, industry professionals can use the BLS figures as one of several benchmarks or monitors to consult for decision-making, strategy-setting and/or client consultations.
In that sense, the recent BLS news about unemployment decline in insurance may at least encourage industry people to “hang in there” (versus throw in the towel).
It may also serve as a source of encouragement to agents and advisors who have voiced frustration with what they perceive to be a general decline in service from a number of carriers, beginning with the start of the last recession. Most conversations about this portray the decline as a function of layoffs and cost-cutting measures, not inept management or malfeasance, but insurance practitioners still complain that service declines have made doing business more difficult.