South By North Strategies, Ltd.

January Budget Report

The newest economic and revenue report prepared by the staff of the NC General Assembly suggests that joblessness and budget shortfalls continue to trouble North Carolina.

Among the report’s findings are the following:

• As of December, state tax collections are running $30 million above target. This is due to a corporate resolution payment initiative that collected more revenue than the Department of Revenue anticipated.
• Absent that windfall collection, revenue collections would be $240 million (2.6 percent) below target.
• Sales tax collections continue to plunge but have been offset by higher rates authorized by the assembly. Net collections are running $120 million below target.
• Net withholding tax collections also are declining and are running 2 percent below target.
• An employment rebound is essential to any long-term economic and revenue recovery; unfortunately, few signs point to such growth.

Union Membership Trends: 2009

From the Center on Economic and Policy Research’s analysis of union membership trends in 2009:

The collapse of the housing bubble and corresponding decrease in private consumption and investment partially reversed small but significant membership gains by the labor movement over 2007 and 2008. As total employment in 2009 fell by several million workers, unions lost more than 770,000 members. Steep declines in manufacturing and construction accounted for nearly 60 percent of the reduction in private-sector employment over 2009. In turn, more than 60 percent of the union membership loss occurred within those two industries.
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As a result, the union membership rate in the private sector, the bulk of the U.S. economy, dropped to 7.2 percent in 2009 from 7.6 percent in 2008. The fall in private sector unionization in 2009 was largely due to regional variation in the recession’s burden on industries. In the manufacturing industry, for instance, the union membership rate fell from 11.4 percent in 2008 to 10.9 percent in 2009. This decline in the national rate stemmed largely from the disproportionate impact of the recession on manufacturing jobs in the Midwest, where unions are relatively strong.

Weekend Wonk Out

A round-up of policy reports from the week ending on 1/22:

• Demos looks at big banks becoming bigger.
• The Brookings Institution assesses the suburbanization of poverty.
• The Center for American Progress offers a review of economic conditions.

Two Years of Job Market Deterioration

CHAPEL HILL (January 22, 2010) – The December employment report released today by the Employment Security Commission contains few signs of a recovery in the job market. Since the start of the recession in December 2007, North Carolina has lost six percent of its payroll employment base and has seen its unemployment rate climb to a modern high of 11.2 percent.

Last month, North Carolina employers eliminated 2,400 more positions than they created; private-sector employers accounted for all of the losses. Although the state’s labor market has fluctuated between periods of slight payroll employment gains and losses over the past five months, overall employment conditions are bleak.

“The past two years have been atrocious ones for working North Carolinians,” says John Quinterno, a principal a South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Although jobs losses appear to have bottomed out in July, no real improvements have occurred since. The job market is stuck at the bottom of the recession.”

In December, North Carolina employers shed 2,400 more positions than they added. The public sector gained, on net, 800 positions, and the private sector cut, on net, 3,200 positions. Among private industries, leisure and hospitality services eliminated the most positions (-2,600), followed by manufacturing (-900), and trade, transportation and warehousing (-800). Professional services posted the largest numerical gain (+1,900), followed by government (+800), and information (+600). Furthermore, an upward revision to the November report reduced total net job losses for that month from 5,600 to 2,400.

“Although job market conditions appear to have stabilized, private-sector hiring remains scarce,” adds Quinterno. “In 2009, private employers cut 141,600 more positions than they added. More alarmingly, monthly net private-sector payroll growth has been positive just three times since the start of the recession. The private sector is not in a position to ignite or sustain a labor market rally.”

Despite the recent moderation in job losses, conditions have deteriorated markedly since last year. Compared to December 2008, the state had 124,200 fewer jobs (-3.1 percent). In terms of individual industries, manufacturing (-53,500) and construction (-33,700) lost the greatest number of positions over the past year, while construction also declined the most in relative terms (-15.1 percent). Government employment grew the most in absolute (+17,400 positions) and relative (+2.4 percent) terms.

“The job losses that have occurred during this recession are greater than those experienced during past ones,” notes Quinterno. “Severe job losses have pushed unemployment to the highest levels recorded since the mid-1970s.”

The extent of joblessness is reflected in December’s household data. Last month, the labor force contracted due to the decision of frustrated workers to abandon their job searches. Had those individuals remained in the labor force, the December unemployment rate would have been even higher than the official one. Over the past year, the number of unemployed North Carolinians grew by 36.7 percent and the unemployment rate rose to 11.2 percent from 8.1 percent. Additionally, over the year, the share of the working-age population participating in the labor market fell to 62.8 percent.

“North Carolina’s labor market is stuck in recessionary doldrums,” observes Quinterno. “A sizable share of the working-age population is jobless, yet little demand for labor appears to exist, especially in the private sector. Until that changes, conditions are unlikely to improve.”

December Employment Report: North Carolina

The December employment report released today by the Employment Security Commission contains few signs of a recovery in the job market. Since the start of the recession in December 2007, North Carolina has lost six percent of its payroll employment base and has seen its unemployment rate climb to a modern high of 11.2 percent.

In December, North Carolina employers shed 2,400 more positions than they added. The public sector gained, on net, 800 positions, and the private sector cut, on net, 3,200 positions. Among private industries, leisure and hospitality services eliminated the most positions (-2,600), followed by manufacturing (-900), and trade, transportation and warehousing (-800). Professional services posted the largest numerical gain (+1,900), followed by government (+800), and information (+600). Furthermore, an upward revision to the November report reduced total net job losses for that month from 5,600 to 2,400.

Click here to read South by North Strategies analysis of the December employment report.