Buffalo Niagara’s unemployment rate hits a modern-day low, but for the wrong reasons


The worker shortage across the Buffalo Niagara region is getting worse, and it’s pushing the local unemployment rate to a modern-day low.

The Buffalo Niagara unemployment rate fell to 2.7% during October – its lowest level since at least 1990, the state Labor Department reported on Tuesday.

But the drop in unemployment is not due to a surge in hiring. Instead, the record-low jobless rate stems from a shrinking local workforce that has made it harder for businesses across the region to find workers to fill open positions.

In fact, the region has nearly 10,000 fewer people in the workforce than it did in October 2019, before the Covid-19 pandemic upended the local job market – a drop of nearly 2%.

That shrinking workforce has put pressure on local employers because it has made it harder to find workers to fill open positions, some stemming from the decisions by older workers during the pandemic to retire earlier than they otherwise might have.

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In addition, the tight labor market has pushed up wages and created more competition among employers for workers, making it easier – and more lucrative – for workers to jump from one job to another. And the rise in the minimum wage has made entry-level wages in industries that previously were far apart much closer, spurring greater competition in hiring across sectors, from retail to manufacturing and leisure and hospitality, said Timothy Glass, the Labor Department’s regional economist in Buffalo.

“The worker shortage is still definitely a problem,” Glass said.

That worker shortage has contributed to the overall sluggish pace of hiring across the region. A separate report – based on a different survey than the one used to calculate the unemployment rate – found last week that hiring has been flat across the region for the past two months and generally sluggish since spring, leaving Buffalo Niagara about 27,000 jobs short of what it had before the pandemic – a shortfall of 4% from pre-pandemic levels at a time when the country as a whole already has recovered all of the jobs it lost during the pandemic.

That sluggish hiring normally would mean a big increase in the unemployment rate, but the opposite has occurred because of the scarcity of labor. As a result, it has been fairly easy for workers who want a job to find one.

That helped push the number of unemployed people across the region down to a modern-day low of 14,800 during October – more than 7,000 below its pre-pandemic level.

But the region’s smaller pool of available workers means that unemployment can be lower even if fewer workers are working. In fact, the number of people holding jobs remains below its pre-pandemic level by about 2,500.