In November of 2010, North Carolina’s unemployment rate fell to 9.8 percent, the first time in nearly three years that North Carolina’s unemployment rate did not exceed the national rate.
One year later, the US unemployment rate fell in November to 8.6 percent. The most recent estimate for North Carolina, from October, put the state unemployment rate at 10.4 percent.
What happened over the past year that caused North Carolina’s unemployment rate to rise even as the national unemployment rate fell?
The unemployment rate is defined as the number of unemployed workers as a share of the total labor force. (The labor force is the sum of employed persons plus unemployed individuals who are actively seeking work.) For the unemployment rate to fall, either the number of unemployed workers must decrease or the size of the labor force must increase.
Nationally, the unemployment rate fell over the past year because the number of unemployed workers fell even as the size of the labor force remained essentially the same. In North Carolina, the unemployment rate rose over the past year because the size of the labor force increased faster than the economy created jobs, thus increasing the number of unemployed workers.
Because North Carolina’s labor force is growing, the state’s economy must create jobs at a faster pace than the country as a whole to bring the state’s unemployment rate down towards the national rate.