South By North Strategies, Ltd.

CHAPEL HILL (October 29, 2010) – Local labor market conditions remained weak across much of North Carolina in September, according to preliminary data released today by the Employment Security Commission. Last month, 37 counties posted double-digit unemployment rates, while 7 counties recorded rates of at least 12 percent.

“September was a lackluster month for private-sector job creation in communities across North Carolina,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Although unemployment rates dropped in many places, much of the change was due to drops in the sizes of local labor forces rather than improvements in local conditions.”

Since the onset of the recession in December 2007, North Carolina has shed 6 percent of its payroll employment base (-250,400 positions) and has watched its unadjusted unemployment rate climb from 4.7 percent to 9.1 percent. While the state gained 10,100 more positions than it lost in September, the private sector contributed just 500 jobs to that total.

Every part of the state experienced weak labor markets in September. Unemployment rates exceeded 10 percent in 37 counties, and in 7 counties, at least 12 percent of the labor force was jobless and actively seeking work; over the past year, there has been a notable reduction in the number of counties with unemployment rates in excess of 12 percent. Individual county unemployment rates ranged from 4.1 percent in Currituck County to 14.8 percent in Scotland County.

“Labor markets in non-metropolitan communities remain weak,” adds Quinterno. “Last month, 9.9 percent of the non-metro labor force was unemployed, compared to 8.8 percent of the metro labor force. More alarmingly, the non-metropolitan labor force continued to shrink. Between September 2009 and September 2010, the non-metropolitan labor force contracted by 2.7 percent or 36,965 individuals. Many of those missing persons are effectively jobless.”

Last month, unemployment rates fell in all 14 of the state’s metropolitan areas. Rocky Mount had the highest unemployment rate (11.8 percent), followed by the Hickory-Morganton-Lenoir area (11.7 percent). Durham-Chapel Hill had the lowest rate at 6.7 percent.

Because of the lack of seasonal adjustments, monthly fluctuations in local unemployment rates must be interpreted cautiously. A better comparison is an annual one.

Compared to September 2009, unemployment rates were the same or lower in 96 counties (the exceptions were Hoke, Hyde, Northampton, and Swain counties) and every metro area. Yet compared to a year ago, 76 counties and 6 metro areas had smaller labor forces. Among metros, Hickory-Morganton-Lenoir posted the largest decline in the size of its labor force (-3.4 percent), followed by Burlington (-3.2 percent). Jacksonville posted the largest gain (+7.3 percent).

“Recent drops in unemployment rates have been driven not by improvements in underlying conditions, but by workers abandoning the job market,” cautions Quinterno. “The robust job growth needed to absorb displaced individuals and new workers simply is not happening. North Carolina is mired in a weak, jobless recovery.”

In the long term, any meaningful recovery will be driven by growth in the state’s three major metro regions: Charlotte, the Research Triangle, and the Piedmont Triad. Yet job growth in 2010 has been sluggish. Collectively, employment in these three major metro regions has fallen by 4.2 percent since the start of the recession. The overall September unemployment rate in the major metros equaled 8.7 percent. Of the three areas, the Research Triangle had the lowest unemployment rate (7.5 percent), followed by the Piedmont Triad (9.6 percent) and Charlotte (10.7 percent).

“The September employment report illustrates just how weak the recovery really is,” explains Quinterno. “In the year since the state’s labor market hit bottom, few meaningful improvements have occurred. Public policy supports provided a boost in late 2009 and early 2010, but the economy has been unable to stand on its own without them. At this point, the idea that a recovery is underway has little connection to the experience of hundreds of thousands of North Carolinians who are finding themselves boxed out of the labor market.”