12.17.2010 News Releases, Policy Points

NC’s Labor Market Still Lags

CHAPEL HILL (December 17, 2010) – November’s loss of 12,500 payroll positions was the second-largest monthly drop recorded so far in 2010 in North Carolina. That same month, according to data released today by the Employment Security Commission, the state’s unemployment rate rose to 9.7 percent. Additionally, the departure of 3,330 North Carolinians from the labor force reduced the size of the state’s labor force to a level last seen in July 2006.

“North Carolina’s labor market still has not turned a corner,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “At a point in the business cycle when prospects should be improving, they instead have worsened.”

Last month, North Carolina employers cut 12,500 more payroll positions than they added. Net losses occurred in both the private sector (-11,500 position) and public sector (-1,000). Among private industries, education and health services netted the most positions (+4,800), followed by financial activities (+1,100), information (+300), and other services (+200). The gains were more than offset by declines in trade, transportation and utilities (-5,200), leisure and hospitality services (-5,200), professional and business services (-3,600), construction (-2,300), and manufacturing (-1,600).

Additionally, a revision to the October data reduced the net job growth first reported for the month. Instead of gaining zero positions in October, North Carolina lost 1,500 positions. With that revision, North Carolina has shed, on net, 284,300 positions – 6.8 percent of its payroll employment base – since December 2007.

“November was the second-worst month for job losses so far in 2010,” notes Quinterno. “Not only were there fewer payroll jobs in November than at any point in 2010, but total employment in North Carolina has fallen back roughly to the level recorded in December 2009. All of the job growth made earlier in 2010 has been erased. Total payroll employment now is just 0.4 percent greater than the level posted in September 2009, the month when the labor market bottomed out. ”

Since November 2009, North Carolina has lost 6,100 jobs (-0.2 percent). In terms of individual industries, professional and business services grew the most in absolute terms (+14,400), information the most in relative terms (+3.6 percent). Construction shed the most jobs in absolute and relative terms (-9,400, -5.2 percent).

The household data for November also were troubling. Last month, the labor force contracted by 0.1 percent as 3,330 individuals stopped working or seeking work. The number of employed individuals fell while the number of unemployed individuals rose to 433,240. The unemployment rate also ticked up to 9.7 percent from 9.6 percent. Moreover, the continued reduction in the size of the labor force is disturbing and suggests that joblessness is much more widespread than captured in official measures.

“Some 107,000 North Carolinians have left the labor force since April,” observes Quinterno. “That contraction is responsible for much of the recent decline in the unemployment rate and is a sign of an extremely unhealthy labor market. The size of the state’s labor force now is at the lowest level recorded since July 2006.”

“The November employment report offers no evidence that the state’s labor market has turned a corner,” added Quinterno. “Much of the growth experienced early in 2010 was due to temporary public policy supports, and the private sector has not stepped forward to fill the void in demand left by the expiration of those supports.”

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