South By North Strategies, Ltd.

Regaining Jobs in North Carolina

A recent article in the Triangle Business Journal asked how long it might take for North Carolina’s labor market to recover from the recession. The consensus opinion: a long time.

To help illustrate that point, the article featured data compiled by South by North Strategies, Ltd.

Following two previous recessions, the jobs bounce back was both quicker and stronger. According to data supplied by Chapel Hill-based South by North Strategies, after hitting bottom in the downturn of 1991, the state recovered to pre-recession levels in just 13 months by adding 6,800 jobs a month. From the trough of 2001 slowdown, recovery took 28 months with employment growing by 6,500 jobs a month.

Editor’s Note

Policy Points will be updated on a reduced schedule during the week of March 8, 2010. Please check periodically for updates.

Understanding Trade Deals

Using a new comprehensive research framework, the Economic Policy Institute estimates that proposed international trade deals with Korea and Colombia would displace up to 214,000 jobs and expand the American  trade deficit by $16.8 billion by 2015.

Fixing the Housing Mess

Writing in The New Republic, U.S. Rep. Brad Miller of North Carolina offers ideas for dealing with the housing mess:

The toxic assets backed by mortgages are impossible to value. The concern that taxpayers would get fleeced buying toxic assets from the financial industry was well justified. Whole mortgages are not hard to value at all. There are frequent, well-publicized auctions of mortgages with a sufficient number of informed, sophisticated buyers. The auctions are an almost perfect pricing mechanism. The problem for the financial industry is not the difficulty of valuing troubled mortgages; the problem is that many mortgages are not worth much. There are obviously many considerations in the price, but distressed mortgages generally sell for about 30 to 50 cents on the dollar at auction. And any honest valuation of many second liens would be pennies on the dollar.
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If the government could purchase, either by voluntary sale or by eminent domain, distressed mortgages for 30 to 50 cents on the dollar, there would be ample room to reduce the principal to make the mortgage affordable. In other cases, the government could buy the home in exchange for cancelling the mortgage and enter into a long-term lease with the former homeowner.

Leaving in Droves

A new analysis from the Economic Policy Institute finds that  1.3 young workers (ages 16-24) have abandoned the labor market since the start of the recession. During that time, the share of young workers participating in the labor force has fallen to 54.7 percent from 59.1 percent.

Editor’s Note

Policy Points will be updated on a reduced schedule during the week of March 1, 2010. Please check daily for updates.

Around the Dial – Feb. 26

Economic policy reports, blog postings, and media stories of interest:

• Calculated Risk looks at new home sales in January.
• Demos explains the proposed Consumer Financial Protection Agency.
• Robert Reich wants to “bust up” health insurance trusts.
• Economix reports that younger voters are more pro-government.

NC Unemployment Claims: Week of 2/6

For the benefit week ending on February 6th, 23,874 North Carolinians filed initial claims for state unemployment insurance benefits, and 214,529 individuals applied for state-funded continuing benefits. Compared to the prior week, there were fewer initial and continuing claims. These figures come from data released today by the U.S. Department of Labor.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 19,438 initial claims were filed over the last four weeks, along with an average of 208,237 claims. Compared to the previous four-week period, both initial and continuing claims were lower.
One year ago, the four-week average for initial claims stood at 28,783 and the four-week average of continuing claims equaled 204,888.

The graph (right) shows the changes in unemployment insurance claims (as a share of covered employment) in North Carolina since the recession’s start in December 2007.

Although new and continuing claims appear to have peaked for this business cycle, the claims levels remain elevated and point to a labor market that remains extremely weak. Especially troubling is the high level of continuing claims, which suggests that unemployed individuals are finding it extremely difficult to find new positions.