South By North Strategies, Ltd.

CHAPEL HILL (March 10, 2011) – North Carolina’s labor market did not begin 2011 on a footing much different from the one on which it ended 2010. According to data released today by the Employment Security Commission, North Carolina gained 4,500 payroll positions in January, but that gain did little to close North Carolina’s large jobs gap. Furthermore, annual data revisions released today indicate that the jobs gap is even bigger than first thought.

“January delivered little in the way of meaningful job growth for North Carolina,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Labor market conditions remained quite weak.”

Last month, North Carolina employers added 4,500 more payroll positions than they cut. Net gains occurred in both the private (+2,200) and public (+2,300) sectors. Among private industries, trade, transportation, and utilities netted the most positions (+11,300), followed by  manufacturing (+1,400), and financial activities (+1,100). The gains were offset by declines in construction (-5,100), education and health services (-3,300), and professional and business services and leisure and hospitality services (both -1,000).

Alarmingly, a regular annual revision to Employment Security Commission data revealed that the state has lost even more jobs since 2007 than first thought. The original data showed that, through December 2010, North Carolina had lost, on net, 272,800 payroll positions, but after accounting for today’s revision, the actual net number of jobs lost across the state was 314,900. While job growth in January offset some that gap, North Carolina still has lost, on net, 310,400 positions—7.4 percent of its payroll employment base—since December 2007.

“North Carolina’s labor market is even worse off than previously thought,” notes Quinterno. “Meaningful job growth simply is not occurring, and in many ways, conditions actually have deteriorated. Not only has North Carolina lost more jobs than first estimated, but the recession also ran longer than initially believed. Job loss in North Carolina did not bottom out until December 2009 and since then, total payroll employment has grown by just 0.3 percent.”

Between January 2010 and January 2011, North Carolina gained 6,400 jobs (0.2 percent). Virtually all of the growth (+14,100 positions) occurred in the private sector, while the public sector shed 7,700 positions. In terms of individual industries, professional and business services grew the most in absolute and relative terms (+18,000, +3.8 percent). Construction shed the most jobs in absolute and relative terms (-13,900, -7.7 percent). In the public sector, net job loss resulted entirely from reductions at the state (-4,200) and local (-4,900) levels.

The household data for January, meanwhile, were mixed. Last month, the labor force grew by 0.1 percent as 3,341 more individuals found work or actively sought work. On the other hand, the total number of employed individuals fell, and the number of unemployed individuals rose to 440,622. These dynamics pushed the statewide unemployment rate to 9.9 percent. Furthermore, a variety of other data points suggest that joblessness and the attendant hardships are much more widespread than reflected in the official unemployment measure.

“The ongoing decline in the size of the labor force remains a worrisome trend,” observes Quinterno. “Compared to a year ago, there are 81,835 fewer people working or actively seeking work. In January, just 61.7 percent of the state’s available labor force was employed or seeking work.”

“The January employment offers little evidence that a recovery in the job market is underway in North Carolina,’ added Quinterno. “Compounding the problem is the fact that the annual data revisions showed the state’s job gap to be even larger than first thought. 2011 hardly is off to a good start.”