In case your News & Observer didn’t arrive at your doorstep or got buried in the snow last Thursday, be sure to check out John Quinterno and Dean Baker’s take on the false claims about a Carolina Comeback. In detail, they lay out just why the idea that unemployment insurance cuts have led to an improved economic picture for North Carolina’s economy has no support in the data.
It’s true that the statewide unemployment rate has in fact fallen sharply since the cuts were implemented, dropping from 8.8 percent in June to 6.9 percent in December.
The drop, however, did not come about because people rushed out and found jobs. Employment as measured by the household survey used to determine the unemployment rate rose by 41,364 persons (1 percent) between June and December, far too little to explain the sharp drop in the unemployment rate. According to the household survey, only 13,414 more persons (0.3 percent) were at work in December 2013 compared with a year earlier.
If people weren’t finding jobs, why did the unemployment rate fall? It turns out that the legislature’s prescription for lowering the unemployment rate worked through a different channel. Nearly 52,000 people were reported as “leaving the labor force” between June and December, meaning that they were no longer employed nor actively seeking work.
In fact, North Carolina ended 2013 with a labor force that had 111,000 fewer participants (-2.3 percent) than was the case a year earlier.