2015 Series • No. 2015–2
Current Policy Perspectives
Did Abnormal Weather Affect U.S. Employment Growth in Early 2015? 
A current policy concern centers on how the severe winter weather experienced in some parts of the country may have affected the economy earlier this year. As of 2015:Q1, monthly payroll growth has slowed by more than 100,000 jobs compared to 2014:Q4, while GDP declined at an annual rate of 0.7 percent. To measure the potential effect of weather on recent employment growth, the author estimates a regression model using state-level employment and weather data from 1981 onward. The coefficients from this model are combined with data on recent weather to generate an estimate of how weather is likely to have affected employment growth earlier this year. The specification of the regression model builds on some recent research by Boldin and Wright (2015), who show that abnormal weather is likely to have the biggest effect on employment if it occurs on or just before the 12th day of each month, due to the timing conventions of the government's employment surveys.
Key Findings
- During the first four months of 2015, the harsh winter weather exerted a significant effect on the pattern of monthly payroll employment. The severe weather explains about 40 percent of the surprising March dip in employment growth and a significant portion of the April rebound.
- When the effects of the abnormal weather are removed, the resulting pattern of employment growth over the first four months of this year is much more stable than that of the actual monthly data, suggesting an underlying rate of employment growth of just less than 200,000 jobs per month.
- Over the first four months of 2015, the weather effect averages out to essentially zero. Consequently, bad weather does not appear to be responsible for the overall slowdown in monthly employment growth, which averaged more than 300,000 jobs per month in 2014:Q4.
Exhibits
Implications
These results illustrate how accounting for the effects of abnormal weather may smooth the monthly pattern of employment growth, a finding that should aid policymakers who rely on employment estimates to help guide their decisions. Additionally, recent weather conditions appear to have had significant negative effects on employment growth only in March, and these effects were essentially reversed in April. Consequently, it remains to be determined why the overall growth rate of U.S. employment appears to have slowed markedly over the first third of 2015.
Abstract
This research note investigates the relationship between the abnormally severe winter experienced in many parts of the United States and the pattern of monthly employment growth during the first four months of 2015. The results suggest that weather reduced employment growth substantially in March and raised it in April. But the overall weather effect averages out to near zero when the four months are considered as a whole, so weather cannot explain the general slowdown in U.S. employment growth experienced since 2014 ended. More generally, the results show that aligning weather data to be consistent with the point-in-time nature of employment surveys is critical for this type of study. In fact, giving more weight to weather occurring just before survey weeks may deliver better estimates of abnormal weather's effects on employment.