South By North Strategies, Ltd.

An All-Too-Familiar Jobs Report

CHAPEL HILL (August 6, 2010) – The national employment report for July showed little deviation from recent trends. Last month, employers eliminated 131,000 more payroll positions than they added. An expected fall in temporary census employment drove that decline; after accounting for it, the economy netted 12,000 positions, a level grossly insufficient to either keep pace with workforce growth or re-absorb jobless individuals.

“Fundamental employment dynamics were little changed in July,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Payroll employment fell due to the ending of temporary census positions. When those jobs are excluded, the nation netted just 12,000 payroll positions, all of which were in the private sector.”

In July, the nation’s employers shed 131,000 more payroll positions than they added. Losses occurred primarily in the public sector due to the elimination of 143,000 temporary census jobs coupled with the loss of another 59,000 federal, state, and local positions. When census reductions are excluded, the economy netted just 12,000 positions. And payroll employment levels for June were revised sharply downward: after adjusting for cuts in census employment, the economy added just 27,000 payroll positions in June.

The largest private-sector gains in July occurred in manufacturing (+36,000) and education and health services (+27,800). Finance payrolls fell by 17,000 positions. All other major industry groups posted little or no change. Meanwhile, the public sector slashed 59,000 positions in addition to temporary census ones; local government accounted for the bulk of that decline.

“The July employment report illustrates just how weak the economy is without policy supports,” noted Quinterno. “The private-sector is proving unable to offset the drop in temporary census employment. So far in 2010, the private sector has added an average of just 90,000 jobs per month. That is an insufficient level of job creation.”

Weak job prospects are reflected in the July household survey. Last month, 14.6 million Americans – 9.5 percent of the labor force – were jobless and actively seeking work. Proportionally more adult male workers were unemployed than female ones (9.7 percent vs. 7.9 percent). Similarly, unemployment rates were higher among Black (15.6 percent) and Hispanic workers (12.1 percent) than among White ones (8.6 percent). The unemployment rate among teenagers was 26.1 percent.

Furthermore, newly available data show that 8.4 percent of all veterans were unemployed in July; the rate among veterans who had served since September 2001 was 11.8 percent.

“In developments inconsistent with a recovery, 181,000 individuals left the labor force in July, and the share of the adult population engaged in economically productive activities fell,” added Quinterno. “Compared to a year ago, the labor force is smaller, fewer people are employed, and the unemployment rate essentially is unchanged.”

Job remained hard to find in July. Last month, 44.9 percent of unemployed workers had been jobless for at least six months with the average spell of unemployment lasting for 34.2 weeks. Many other individuals stopped looking, and counting those individuals and those working part-time on an involuntary basis brings the underemployment rate to 16.5 percent.

“The reduction in temporary census hiring in July exposed just how weak the labor market really is,” observed Quinterno. “The job market appears unable to stand without the crutch provided by policy actions, and jobless individuals across the country simply are abandoning the labor market.”

The South’s Difficult Decade

Even before the onset of the “Great Recession” in December 2007, the 2000s had proven to be a difficult decade for working Southerners. Across the region, the 2000s were a period marked by meager job growth, rising joblessness, rapid industrial change, and mounting economic hardships. And the decade’s developments offset many of the gains – most notably against poverty – made by the region during the 1990s.

These findings come from the recent briefing paper, The South’s Difficult Decade, prepared by South by North Strategies, Ltd. for The Mary Reynolds Babcock Foundation in Winston-Salem, NC.

The brief summarizes key economic changes that occurred between 2000 and 2009 in the ten states where the foundation is active: Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, and West Virginia.

NC Local Labor Markets In June

CHAPEL HILL (July 23, 2010) –  North Carolina’s local labor markets exhibited little energy in June, based on preliminary data released today by the Employment Security Commission. During the first month in a hot, languid summer, 55 counties posted double-digit unemployment rates, while 24 counties recorded rates of at least 12 percent.

“The June employment numbers lacked any real vitality,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “While conditions in some areas improved over the last year, the overall situation is grim. And further troubles likely are in store for 2010’s second half.”

Since the onset of the recession in December 2007, North Carolina has shed 5.7 percent of its payroll employment base (-238,100 positions) and has watched its unadjusted unemployment rate climb from 4.7 percent to 10.1 percent.

Every part of the state experienced weak labor markets in June. Unemployment rates exceeded 10 percent in 55 counties, and in 24 counties, at least 12 percent of the labor force was jobless and actively seeking work. County unemployment rates ranged from 4.8 percent in Currituck County to 16.3 percent in Scotland County.

“Labor markets in non-metropolitan communities remain especially weak,” adds Quinterno. “Last month, 11 percent of the non-metro labor force was unemployed, compared to 9.6 percent of the metro one. More alarmingly, the non-metropolitan labor force continues to shrink. Since December 2007, the non-metropolitan labor force has contracted by 1.2 percent. Many of those missing individuals are effectively jobless.”

Last month, unemployment rates rose in 8 of the state’s metropolitan areas, and 7 metros lost more jobs than they gained. The Rocky Mount and Hickory-Morganton-Lenoir areas tied for the highest unemployment rate (13 percent), followed by Burlington and Charlotte (11.1 percent). Durham-Chapel Hill had the lowest rate at 7.5 percent.

“Because of the lack of seasonal adjustments, monthly fluctuations in local unemployment rates must be interpreted cautiously, particularly during the volatile summer months,” warns Quinterno. “A better comparison is an annual one.”

Compared to June 2009, unemployment rates were the same or lower in 65 counties and all 14 metro areas. Yet compared to a year ago, 81 counties and 7 metro areas had smaller labor forces. Among metros, Hickory-Morganton-Lenoir posted the largest decline in the size of its labor force (-3.9 percent), followed by Burlington (-2.4 percent). Fayetteville posted the largest gain (+3.8 percent).

“Despite stabilization in market conditions, the long-term employment picture remains the same,” cautions Quinterno. “The sustained job growth needed to absorb displaced individuals and new workers simply isn’t occurring. Many seeming improvements really are the by-product of workers leaving the labor market.”

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 percent since the start of the recession. The overall June unemployment rate in the major metros equaled 9.6 percent. Of the three areas, the Research Triangle had the lowest June unemployment rate (8.2 percent), followed by the Piedmont Triad (10.6 percent) and Charlotte (11.5 percent).

“The second half of 2010 could be even more difficult for North Carolinians seeking work,” observes Quinterno. “Private-sector job growth is anemic, and much recent growth has resulted from government actions like temporary census hiring, home tax credits, emergency unemployment, and recovery spending. Many of those supports have ended or are about to end.”

Consider the case of the emergency unemployment benefits that expired before being reinstated this week. Explains Quinterno: “Over the last 12 months, unemployed North Carolinians received $5.5 billion in regular state payments and federal emergency benefits. These payments sparked an estimated $8.8 billion in statewide economic activity. In June, the Emergency Unemployment Compensation program alone generated $288 million in economic activity.”

“In the course of extending emergency benefits, the U.S. Congress scaled back the program’s effectiveness,” adds Quinterno. “Congress discontinued the federal addition compensation program, which added $25 to each weekly insurance check. Based on June data, full implementation of that step  would lower the average weekly payment in North Carolina by 8 percent and reduce statewide economic activity by $23 million.”

Still Seeking A Labor Market Recovery

CHAPEL HILL (July 16, 2010) – The June employment report for North Carolina is another in a series of unimpressive 2010 reports. Last month, the state added 5,100 more payroll positions than it lost. Although the private sector netted jobs, reductions in government payrolls – reductions linked primarily to the ending of temporary census positions – offset the bulk of the gains.

“The June employment report is another unimpressive report,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Private payrolls grew, but many of the gains were offset by cuts to public-sector payrolls. The bottom line is little change.”

In June, employers added 5,100 more positions than they eliminated. The private sector netted 11,600 positions with hiring in leisure and hospitality services accounting for 68 percent of the total. Among private industries, leisure and hospitality services gained the most positions (+7,900), followed by professional and business services (+5,700), and manufacturing (+2,000). Those gains were offset by losses in construction (-1,600) and trade, transportation, and utilities (-1,200). Moreover, private-sector gains were offset by a loss of 6,500 public-sector positions, primarily temporary census-related ones.

Additionally, a revision to the May data raised net payroll growth for that month from 12,900 to 24,100; some 46 percent of the additional positions were in the public sector. Accounting for that revision, North Carolina has shed, on net, 238,100 positions or 5.7 percent of its payroll employment base since December 2007.

“Last month, payroll employment grew roughly in line with what is needed to accommodate population growth,” notes Quinterno. “The underlying dynamics, however, do not suggest that North Carolina’s job gap will close anytime soon.”

Labor market conditions have remained fairly flat over the past year. Compared to June 2009, the state had 29,800 more jobs (0.8 percent). In terms of individual industries, government grew the most in actual (+40,200) and relative terms (+5.7 percent). Among private industries, professional and business services added 20,700 more positions than it lost, while education and health services gained 10,700 positions. Construction (-20,300) and manufacturing (-13,300) lost the greatest number of positions over the past year with construction declining the most in relative terms (-10.6 percent).

June’s household data were particularly troubling. Last month, the labor force contracted by 0.6 percent as 26,025 individuals stopped working or seeking work. The number of employed individuals fell, as did the number of unemployed individuals. Due largely to the contraction of the labor force, the unemployment rate fell from 10.4 percent to 10 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.

“Overall, the June employment report contained some positive findings,” observes Quinterno. “Private-sector hiring was higher relative to recent months, and manufacturing employment appears to have stabilized. Unfortunately, a reduction in public-sector employment cancelled out many of those gains, resulting in an unimpressive report. And the reduction in the size of the labor force is alarming.”

“The June report may offer a preview of what is in store for the rest of 2010,” cautions Quinterno. “The private-sector payroll gains are welcome, but it is too soon to know if they are sustainable trends or data blips. Also, the expiration of public policy supports like temporary census hiring may serve as a drag on growth and negate any modest improvements that occur elsewhere in the economy.”

Few Fireworks In June Jobs Report

CHAPEL HILL (July 2, 2010) – The national employment report for June offers little evidence of a sustained economic recovery. Last month, employers eliminated 125,000 more payroll positions than they added. An expected fall in temporary census employment drove that decline; after accounting for it, the economy gained 100,000 positions, a level insufficient to either keep pace with workforce growth or re-absorb jobless individuals.

“There is little in the June employment report to celebrate,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Payroll employment fell sharply due to the ending of temporary census positions. When census jobs are excluded, the nation netted just 100,000 positions, of which 83,000 were in the private sector.”

In June, the nation’s employers shed 125,000 more payroll positions than they added. Losses occurred primarily in the public sector due to the elimination of 225,000 temporary census jobs. When census reductions are excluded, the economy gained 83,000 private-sector positions and 17,000 public-sector ones. The largest private-sector gains occurred in professional and business services (+46,000), primarily in the temporary help services sub-industry (+20,500), followed by leisure and hospitality services (+37,000). Construction payrolls fell by 22,000 positions due primarily to declines in nonresidential construction. All other major industry groups recorded little or no change.

“The June employment report is an uninspiring one that highlights just how dependent the economy is upon governmental supports,” noted Quinterno. “The private-sector proved unable to offset the drop in temporary census employment. In fact, during the first half of 2010, the private sector added an average of just 98,800 jobs each month.”

Weak job prospects also are reflected in the June household survey. Last month, 14.6 million Americans – 9.5 percent of the labor force –  were jobless and actively seeking work. Proportionally more adult male workers were unemployed than female ones (9.9 percent vs. 7.8 percent). Similarly, unemployment rates were higher among Black (15.4 percent) and Hispanic workers (12.4 percent) than among White ones (8.6 percent). The unemployment rate among teenagers was 25.7 percent.

Furthermore, newly available data show that 8 percent of all veterans were unemployed in June; the rate among veterans who had served since September 2001 was 11.5 percent.

“In developments inconsistent with a recovery, 652,000 individuals left the labor force in June, and the share of the adult population engaged in economically productive activities fell,” added Quinterno. “Compared to a year ago, the labor force is smaller, fewer people are employed, and the share of the labor force that is unemployed is unchanged.”

Job remained hard to find in June. Last month, 45.5 percent of unemployed workers had been jobless for at least six months with the average spell of unemployment lasting for 35.2 weeks. Many other individuals stopped looking, and counting those individuals and those working part-time on an involuntary basis brings the underemployment rate to 16.5 percent.

“The reduction in temporary census hiring in June exposed just how weak the labor market really is,” observed Quinterno. “The economy remains dependent on public supports and appears unable to stand on its own.”