Today, the N.C. Division of Employment Security released another disappointing jobs report for August that reflects a weakening private sector exacerbated by the long-term decay in the state’s public sector employment base.
By the numbers, August saw the unemployment rate increase from 9.6% in July to 9.7%. At the same time, the number of employed people in North Carolina dropped by 5,800, and the labor force (the pool of prime-age workers either employed or actively seeking work) remained stubbornly stagnant this month after losing almost 7,000 workers in the year since August 2011. Even more troubling, the private sector shed more than 7,000 jobs last month, and only grew by 1% over the past year.
Historically, during most economic recoveries, public sector employment has been able to cushion downturns in private sector employment. But this recession has been different. North Carolina shed almost 4,000 government jobs in the last year—almost 3,000 of which are in local government. Even more remarkably, the state has lost more 6,000 state government jobs since August 2010, a long-term trend which indicates a significant erosion in the public sector employment base–the one part of labor market over which policy makers have some control.
Although the new employment numbers do show a positive 8,400 increase in government jobs from July to August of this year, including a 5,400 increase in local government employment, this improvement is likely a statistical anomaly related to the fact that many local government employees work in the school system on a ten-month payroll calendar, leaving their jobs in May and returning August. We’ve seen a similar bump in local government employment from July to August in each of the past two years, while overall local government employment has dropped.
These government layoffs do nothing to help private sector employment. In fact, they only hurt private sector businesses by reducing the number of people who have paychecks to spend at private businesses. No paychecks, no customers, no new job creation.
Instead, public sector layoffs only add to the pool of unemployed workers, forcing more workers to compete for fewer jobs, and in the process, driving down wages for everybody.