South By North Strategies, Ltd.

CHAPEL HILL (September 17, 2010) — August was another difficult month for North Carolina’s job market. Last month, the state gained 18,600 more payroll positions than it lost. Yet almost all of the increase was due to an expected rise in public education employment; after accounting for that development, the state netted just 4,800 positions. Moreover, a decline in the size of the labor force suggests that joblessness is more widespread than reflected in the official unemployment rate.

“Despite a seemingly impressive headline number, the basic employment picture was unchanged in August,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “The data are neither consistent with economic recovery, nor suggestive of an imminent rebound.”

In August, employers added 18,600 more positions than they added. The public sector accounted for 74 percent of the gain due to expected hiring by public schools. Private-sector payroll employment, meanwhile, grew by 4,800 positions. Among private industries, trade, transportation, and utilities added the most positions (+1,400), followed by manufacturing (+1,100) and information (+1,000). The gains were offset by losses in leisure and hospitality services (-1,000) and mining and logging (-400).

Additionally, a revision to the July data increased the net job loss first reported for the month. North Carolina actually lost 31,200 positions in July, not the 29,800 positions first reported. With that revision, North Carolina has shed, on net, 259,500 positions or 6.2 percent of its payroll employment base since December 2007.

“North Carolina’s labor market has gone nowhere in 2010,” notes Quinterno. “North Carolina has netted just 26,200 payroll jobs over the course of the year. The pace of growth – 3,700 positions per month – is insufficient to keep pace with population growth, let alone replace the jobs lost during the recession.”

Labor market conditions have been flat over the past year. Compared to August 2009, the state had 36,700 (+0.9 percent) more jobs. In terms of individual industries, government grew the most in absolute terms (+28,100, +4 percent), while professional and business services grew the most in relative terms (+23,200, +5.1 percent). Construction lost the most positions in both absolute and relative terms (-13,600, -7.3 percent).

August’s household data also were troubling. Last month, the labor force contracted by 0.4 percent as 19,740 individuals stopped working or seeking work. The number of employed individuals fell, as did the number of unemployed individuals. Owing largely to the contraction of the labor force, the unemployment rate fell from 9.8 percent to 9.7 percent. The reduction in the size of the labor force is disturbing and suggests that joblessness is much more widespread than reflected in official measures.

“Some 77,500 North Carolinians have left the labor force since May,” observes Quinterno. “The contraction is responsible for much of the recent decline in the unemployment rate. Unfortunately, this is a sign of an unhealthy labor market.”

“The August jobs report illustrates just how weak the economy really is,” explains Quinterno. “Private employers are not slashing jobs at the frenetic pace of late 2008 and early 2009, but they are not adding positions in any meaningful way. Many North Carolinians who are ready, willing, and able to work are finding themselves blocked out of the labor market.”