NC Budget and Tax Center

Missing Workers, NC Budget and Tax Center

This is the season of absolutes, a time for reflecting and rendering judgment. Has it been a year to remember or a year to forget? Are we on the right path, or hopelessly lost? The truth is usually somewhere in the middle, but that doesn’t make provocative copy, and so it is often ignored. While some voices in North Carolina would have you believe that we have finally put the Great Recession in the rear-view mirror, the economic damage lingers. As the two charts below show, a year of generally positive economic performance has not erased the imprint that the Recession left on North Carolina.

2014 End of Year Charts_stll not enough jobs

There is still a larger percentage of North Carolinians without employment than before the Great Recession. From the start of the millennium through 2007, more than 62% of North Carolinians had participated in the workforce each year. That rate dropped precipitously in 2008, and kept sliding until it hit a low of roughly 58% in 2011. While there have been modest gains in the last few years, the labor market in North Carolina still has not recovered sufficiently to return employment levels to where they were before the financial crisis.

2014 End of Year Charts_real unemployment high

Proponents of the “Carolina Comeback” story point to the fact that North Carolina’s headline unemployment rate has come down over the last year, so what’s the worry? The problem is that many people have such a hard time finding work that they don’t appear as “unemployed” in the official figures. A BTC analysis of labor data indicates that the real unemployment rate is twice the official level once we consider all of the people who are not currently looking for work because job opportunities are too few. To be clear, this is not a tally of people who have retired or gone back to school, but rather an estimate of what the unemployment rate would be if we include all of the people who would otherwise be expected to be in the labor force based on historic figures. Including these missing workers pushes North Carolina’s real unemployment rate to almost 13%, twice the official estimate.

The central point here is that we cannot lose sight of the work that still remains to be done. While there has been a good deal of encouraging economic news this year, there are still far too many North Carolinians for whom the recovery remains a promise unfulfilled.

Stay tuned over the next several days for a series of BTC posts that illuminate the 2014 economic landscape and the challenges that need to be addressed in 2015.

NC Budget and Tax Center

BTC - Missing Workers November 2014

The latest report on labor market conditions was released on Friday showing that despite improvements in North Carolina, there remains a long way to go to proclaim a fully recovered economy. One measure of just what remains unaddressed is the number of missing workers in the state, those workers who if job opportunities were stronger would be in the labor market looking for work.

In November 2014, there were an estimated 302,285 missing workers in North Carolina. If these workers had actually been counted in the official unemployment rate that rate would be 12.4 percent, more than twice the official rate for November of 5.8%.

NC Budget and Tax Center

One key measure to assess the strength of the recovery is to look at how nominal wages, wages not adjusted for inflation, grow over time. The reason being that low and flat nominal wage growth is an indicator that employers don’t have to offer wage increases to keep employees since the labor market market continues to be weak.

As the Economic Policy Institute indicates in their release of the Nominal Wage Tracker,  an on-line platform with useful graphics and up-to-date data, a target to aspire to is between 3.5 and 4 percent which is likely the point at which workers would start to see real benefits from economic growth. The actual year over year growth has been 2.11 percent.

NC Budget and Tax Center

The Charlotte Observer reports of the strain on the state’s court system in the wake of state budget cuts in recent years. The state’s court system is expected to run out of funding for juror pay by April of next year, the Charlotte Observer highlights.

The ability of the state’s court system to operate effectively has been increasingly challenged amid cuts in state funding over the years. While other states have adopted technology and incorporated electronic filing systems, North Carolina continues to use a paper-based system, which slows down the judicial process. The time taken to complete civil and criminal cases has increased in recent years, the Charlotte Observer article notes, resulting in a judicial system that is inefficient, more costly, and less customer-friendly.

State lawmakers quoted in the article note their unawareness of the pending funding shortage for juror pay and state that the General Assembly is being asked for money that it doesn’t have. This is increasingly clear as stories throughout the state have highlighted yet another announcement that the state’s revenue collections are below projections.  Official estimates now put the revenue shortfall for the current fiscal year at $190 million.

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NC Budget and Tax Center

The Washington Post began a series that will look at why America’s middle class is shrinking this week.  With it they have put together an important data tool for the public and policymakers to begin to delve into the dynamics affecting the country’s middle class.  The interactive map provides county level data over time of median household income, a measure what the household in the very middle of the distribution earns and a key indicator in assessing the well-being of household’s in a community that is often overlooked.

Analysis of median household income over time and places is not just important for individual household well-being but can also provide important insights into the health of the broader economy.  Equity in economic indicators is increasingly found to be associated with stronger and longer periods of growth.  These are positive outcomes to pursue in a recovery that has been modest and slow.

Nationally, the big take-away is that median household income peaked 15 years ago for more than 80 percent of counties. The data for North Carolina show a few interesting things:

  • Four counties, Hertford, Washington, Richmond and Scotland counties, saw their median household income peak in 1979
  • Rockingham, Rutherford and Cleveland counties saw their median household income peak in 1989
  • The majority of counties saw their median household income peak in 1999