A lot of bad analysis and outright false claims are being circulated about unemployment in North Carolina and recent cuts in the state’s unemployment benefits that are hurting workers and their families.

Let’s clear the air with some facts.

An unemployed worker can’t move to NC and receive unemployment insurance here.

If a person is unemployed, moves to another state and applies for unemployment insurance, the benefits would be paid by the state where his or her former employer was located. To suggest, as Gov. McCrory did recently, that unemployed people were flocking to North Carolina to collect benefits from the state reflects a fundamental misunderstanding of how unemployment insurance works.

The evidence is also clear that there has not been a mass influx of unemployed workers to North Carolina.

The drop in North Carolina’s unemployment rate is largely due to people leaving the labor force, not the cut in unemployment benefits.

As we have noted elsewhere, as have numerous well-respected economists here, here and here, the superficial improvement in the state’s unemployment rate is not signaling a much-improved level of employment.  Rather, the unemployment rate is dropping largely because many jobless North Carolinians have stopped looking for work, shrinking the state’s overall labor force. Why? There are simply not enough jobs for those who want to work.  And that is happening while the working-age population is growing. Read More

Another economist, David Ribar from UNC Greensboro, has provided an analysis of what is happening in North Carolina’s labor market and it doesn’t support the outrageous claims being made about employment improvements from unemployment insurance changes.  The entire piece is worth a quick read  here. This is the key finding.

Figures from the U.S. Bureau of Labor Statistics indicate that the number of non-farm jobs in NC increased 1.35 percent from June 2013 (the month before UI was slashed) to November 2013 (the latest month available).

Over the same months in 2012, when the more generous UI state and federal systems were in place, the number of non-farm jobs increased by 1.50 percent.

Nationally, job growth from June to November was faster in 2013 than in 2012, so NC’s slowdown bucks the national trend.

 

Paul Krugman, economist with Princeton University, wrote a piece on the “Raleigh Experiment” with unemployment insurance cuts this weekend.  His assessment:

there is no sign at all that North Carolina’s harshness has done anything except make the lives of the unemployed even more miserable

Among the data points that Krugman highlights are no rapid acceleration of the state’s employment growth relative to the nations after benefit cuts and the unprecedented decline in the labor force.

A number of economists and analysts are sharing their assessment of what is really happening in North Carolina’s economy and it isn’t pretty.  And contrary to the talking points out there, the decision to drastically reduce unemployment insurance benefits as of July 1 is not improving labor market conditions in our state and could be making it worse.

Lawrence Katz, a Harvard economist, analyzed the change in labor conditions from November 2012 to November 2013 and found that 95 percent of the drop in the unemployment rate is from people dropping out of the workforce, a mere 5 percent from job creation.

This aligns with Allan Freyer’s recent analysis of metro trends in North Carolina which shows that the vast majority of improvements in the unemployment rate are because of declines in the labor force not increases in employment.

Andrew Brod, an economist at UNC Greensboro, found in his analysis that if the labor force remained just at the same level as it was in January, the unemployment rate would be 9.5 percent.  (It is important to note that the working age population since January has grown by 1 percent, not stayed the same or declined as has actually happened with the size of the labor force.) Read More

As the Senate takes up the vote on extending emergency federal unemployment insurance today, one argument by opponents is that it should be paid for.  The good news for opponents of helping jobless workers is that there is a bill to do just that AND start to re-balance our deficit reduction efforts.

The Stop Tax Haven Abuse Act would raise $220 billion over the next decade by closing corporate tax loopholes that provide no economic benefit and reward profitable companies that offshore their profits or otherwise seek to evade taxes.  In some cases, these companies are rewarded for shipping jobs overseas too.

So if opponents are serious about their new-found fiscal responsibility, they should move the Stop Tax Haven Abuse Act to the floor without haste.  But they should not fail to extend unemployment insurance payments to jobless workers in the meantime.

Jobless workers continue to face too few jobs and mounting financial pressure that will flood the economic recovery. The Congressional Budget Office estimates that failing to extend emergency federal unemployment could result in the loss of 300,000 jobs as jobless workers fail to spend in the economy and businesses stop hiring or cut back.

Closing corporate loopholes and extending unemployment insurance at this fragile point in the recovery would not only be good for the economy but makes good fiscal sense.