12.05.2013 News Releases, Policy Points

Drops In Unemployment Mask Weak Conditions

CHAPEL HILL, NC (December 5, 2013) – Between October 2012 and October 2013, unemployment rates fell in all 100 of North Carolina’s counties and in all 14 of the state’s metropolitan areas. Yet over the same period, the size of the labor force decreased in 91 counties and in 14 metro areas.

These findings come from new estimates released by the Labor and Economic Analysis Division of the North Carolina Department of Commerce.

“Unemployment rates across much of North Carolina have moved steadily downward over the past year,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “In many communities, unemployment rates are at the lowest levels recorded since the ‘Great Recession’ began in late 2007. Local unemployment rates nevertheless remain elevated, with 98 counties and 14 metro areas posting unemployment rates greater than those recorded at the end of 2007.”

Compared to December 2007, which is when the national economy fell into recession, North Carolina now has 1.9 percent fewer jobs (-81,000). In October, the state gained 22,200 more jobs than it lost (+ 0.5 percent). Since bottoming out in February 2010, the state’s labor market has netted some 5,609 jobs per month, resulting in a cumulative gain of 246,800 positions (+6.4 percent).

Between August 2013 and October 2013, local unemployment rates decreased in 91 of the state’s 100 counties, rose in eight counties, and held steady in one county. Individual county rates in October ranged from 4.7 percent in Chatham County to 14.4 percent in Scotland County. Overall, 12 counties posted unemployment rates greater than or equal to 10 percent, and 66 counties posted rates between 7 and 9.9 percent.

“Non-metropolitan labor markets still are struggling relative to metropolitan ones,” noted Quinterno. “In October, 8.4 percent of the non-metro labor force was unemployed, compared to 7.2 percent of the metro labor force. Compared to December 2007, the non-metro labor force now has 5 percent fewer employed persons, while the number of unemployed individuals is 48.7 percent larger.”

Between August and October, unemployment rates fell in all 14 of the state’s metro areas. Rocky Mount had the highest October unemployment rate (10.9 percent), followed by Fayetteville (8.9 percent) and Hickory-Morganton-Lenoir (8.3 percent). Asheville had the lowest unemployment rate (5.6 percent), followed by Durham-Chapel Hill (5.7 percent) and Raleigh-Cary (6 percent).

Compared to October 2012, unemployment rates in October 2013 were lower in all 100 counties and all 14 metro areas. Over the year, however, labor force sizes decreased in 91 counties and in 14 metros. In fact, the statewide labor force was 2 percent smaller (-96,972 individuals) in October 2013 than it was in October 2012.

Among metros, Rocky Mount’s labor force contracted at the greatest rate (-4.5 percent), followed by Hickory-Morganton-Lenoir (-3.8 percent) and Greenville (-3.2 percent). With those changes, metro areas now are home to 71.9 percent of the state’s labor force, with 50.7 percent of the labor force residing in the Triangle, Triad, and Charlotte metros.

In the long term, improvements in overall labor market conditions depend on growth in the Charlotte, Research Triangle, and Piedmont Triad regions. Yet growth in these metros remains muted. Collectively, employment in the three metro regions has risen by 4.4 percent since December 2007, and the combined October unemployment rate in the three regions equaled 6.9 percent. That was down from the 8.4 percent rate recorded one year ago yet was above the 6.4 percent rate recorded in October 2008. Of the three broad regions, the Research Triangle had the lowest October unemployment rate (6.1 percent), followed by the Piedmont Triad and Charlotte (7.6 percent in both regions).

The local employment report for October also provides insights into the effects of the extensive changes to the state’s system of unemployment insurance implemented over the summer. Last month, the number of regular unemployment insurance initial claims filed in North Carolina totaled 29,142, down from the 59,118 initial claims filed a year earlier (-50.7 percent). Mecklenburg County was home to greatest number of regular initial claims (3,068), followed by Wake (2,252), Guilford (1,550), Cumberland (1,035), and Forsyth (858) counties.

In October 2013, North Carolinians received a (nominal) total of $63.8 million in regular state-funded and federal unemployment insurance compensation, down from the (nominal) $216.3 million received in October 2012. This sharp decline (-70.5 percent) is attributable to a mix of factors, such as drops in the number of insurance claims resulting from economic improvements and legal changes to eligibility criteria.

Additionally, the state’s decision to exit the federal Emergency Unemployment Compensation (EUC) program reduced the amount of federal unemployment insurance compensation flowing into the state in October. Between October 20102 and October 2013, the amount of federal unemployment insurance benefits paid to North Carolinians fell by 96.8 percent, dropping to a (nominal) total of $3.6 million from a (nominal) total of $113.7 million.

“Despite recent drops in local unemployment rates, labor market conditions remain weak across much of North Carolina,” said Quinterno. “The declines in local unemployment rates actually are masking a number of alarming developments—developments that point to an under-performing economy that is crying out for attention from state and federal policymakers.”

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