01.04.2011 News Releases, Policy Points

Hardly a Festive Time for Local Labor Markets

CHAPEL HILL (January 4, 2011) – The sizes of labor forces in communities across North Carolina continued to shrink in November, based on preliminary data released today by the Employment Security Commission. Compared to one year ago, labor forces were smaller in 81 of the state’s 100 counties and 9 of its 14 metro areas. Furthermore, 56 counties and 5 metros posted double-digit unemployment rates in November.

“Local labor markets across North Carolina continued to struggle in November,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “The ongoing contraction in the sizes of local labor forces is an alarming trend that indicates that the labor market is not yet on the road to recovery.”

Since the onset of the recession in December 2007, North Carolina has shed 6.8 percent of its payroll employment base (-281,800 positions) and has seen its unadjusted unemployment rate climb from 4.7 percent to 9.9 percent. In November, the state as a whole shed 12,500 more payroll positions than it added.

Every broad region of the state experienced weak labor markets in November. Unemployment rates exceeded 10 percent in 56 counties; over the past year, however, there has been a reduction in the number of counties with double-digit unemployment rates. Individual county rates ranged from 5.9 percent in Orange County to 18.6 percent in Graham County.

“Labor markets in non-metropolitan communities remain especially weak,” adds Quinterno. “Last month, 10.8 percent of the non-metro labor force was unemployed, compared to 9.5 percent of the metro labor force. More alarmingly, the non-metropolitan labor force continued to shrink. Between November 2009 and November 2010, the non-metropolitan labor force fell by 4.7 percent or 63,840 individuals. Many of those missing persons are effectively jobless.”

Last month, unemployment rates rose in all 14 of the state’s metropolitan areas. Rocky Mount had the highest unemployment rate (12.8 percent), followed by the Hickory-Morganton-Lenoir area (12.6 percent). Durham-Chapel Hill had the lowest rate (7.1 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 November 2009, unemployment rates were lower in 80 counties and every metro area. Yet compared to a year ago, 56 counties and 5 metro areas had smaller labor forces. Among metros, Hickory-Morganton-Lenoir posted the largest decline in the size of its labor force (-2.7 percent), followed by Greensboro-High Point and Wilmington (tied at -1.1 percent). Asheville and Durham-Chapel Hill posted the largest gain (tied at +1.1 percent).

“Many recent improvements in local unemployment rates have been driven by workers abandoning the job market, not by job growth or improvements in underlying conditions” cautions Quinterno. “Labor force contraction is a sign of an unhealthy economy and shows just how weak the current recovery is. By the same point in time following the previous two recessions, the state’s labor force was growing.”

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 growth has been sluggish. Collectively, employment in these three metro regions has fallen by 5.2 percent since December 2007. The overall November unemployment rate in the major metros equaled 9.3 percent. Of the three areas, the Research Triangle had the lowest unemployment rate (7.9 percent), followed by the Piedmont Triad (10.2 percent) and Charlotte (11.2 percent).

“In the 14 months since the state’s labor market hit bottom, local job markets have recorded few improvements, apart from some short-lived gains resulting from public policy actions,” explains Quinterno. “The private sector simply is not generating jobs at a pace either expected at this point in a recovery or needed to accommodate all those who wish to work. As a result, some 64,000 North Carolinians have responded over the past year by leaving the labor force.”

For additional information on the performance of North Carolina’s local labor markets in 2010, click here to read South by North Strategies’ year-end analysis.

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