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NC Budget and Tax Center

North Carolina’s falling labor force continues to drive reductions in the state’s unemployment rate, according to the February jobs report released by Division of Employment Security this morning. Over the last year, just 4 in 10 formerly unemployed workers actually found jobs, while the rest dropped out of the labor force.

Despite falling to 6.4 percent since February 2013, the unemployment rate masks the true plight of joblessness in the state.  Since the unemployment rate is calculated by dividing the number of unemployed people by the number of people in the labor force, the unemployment rate can also go down if the labor force shrinks, even if genuine joblessness remains high.  And that’s what happened from February 2013 to February 2014—only 48,000 jobless workers moved into employment over the last year. The rest—another 64,000 workers—just gave up and dropped out of the labor force, continuing a historically unprecedented contraction in the state’s workforce.

If North Carolina is going to see a healthy long-term recovery in employment growth, we need to see all jobless workers moving into jobs, rather than out of the labor force. And we’re not seeing that because job creation remains anemic. In fact, North Carolina created just 46,000 payroll jobs over the last year, according to preliminary estimates released today. This is significantly less than the 69,000 jobs created in 2012, and the 62,000 jobs created in 2011.

Five years into the recovery from the Great Recession, we would expect North Carolina to see a steadily accelerating rate of employment growth each year, yet the numbers released today paint a different picture. While these numbers will certainly be revised in the next year, it is clear that the state’s employment growth is not living up to expectations, and more importantly, is failing to meet the needs of the state’s unemployed.

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NC Budget and Tax Center

Governor McCrory is at it again—incorrectly claiming that his decision to dramatically cut unemployment benefits is responsible for turning around the state’s job market. During a visit to Morganton over the weekend, the Governor stated:

 “There’s nothing worse than if you have a job opening and someone decides to take a government check instead. So we had to bring the two together,” he said. “We made a decision [to cut unemployment benefits]. And that decision alone is the one lone factor, in comparison to any other state, which I think has helped North Carolina lower its unemployment rate drastically in the last five months.”

While the Governor is correct that the state’s unemployment rate has dropped over the last year (from a revised 8.8 percent in January 2013 to 6.7 percent a year later), he couldn’t be more wrong about why the rate has dropped—and what it means for the state’s economy. The unemployment rate is falling because the labor force is contracting, not because jobless workers are moving into jobs.

Let’s take these one at a time.

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Uncategorized

North Carolina’s unemployment rate dropped to 6.7 percent in January, but the decline is largely because the labor force continues to shrink not because of significant gains in employment, according to the NC Budget & Tax Center.  Over the last year, the state labor force contracted by 105,600 workers, more than 1.3 percent, to the lowest levels in three years.

“Only 4 out of every 10 unemployed workers found jobs in the last year,” said Allan Freyer, BTC Public Policy Analyst. “If North Carolina is going to see a healthy long-term recovery in employment growth, we need to see all jobless workers moving into jobs, rather than out of the labor force.”

Freyer believes that most of the job growth we’re seeing in North Carolina is due to improvements in the national economy, rather than something special happening in the Tarheel State:

“In recent months, we’ve heard claims that policies enacted in the first half of 2013 generated extra special job growth in the second half of 2013. But the reality is far different,” Freyer said. “Across every meaningful measure of labor market progress, the second half of 2013 failed to perform better than the second half of 2012.”

Freyer appeared on NC Policy Watch’s News & Views over the weekend to discuss the state’s struggling economy. For an excerpt of that radio interview, click below. You can listen to the full segment here.

The Budget & Tax Center’s takeaway message on the latest jobs report: North Carolina needs to create jobs at a much faster rate than the national average and its own recent historical performance.  Along with creating more jobs overall, the state needs to create better jobs that pay enough to allow workers and their families to make ends meet.

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NC Budget and Tax Center

AF-Jobs

Crossposted on NC Policy Watch

Over the past few months, Governor McCrory has been claiming his policies—especially cutting unemployment benefits—are responsible for reducing the state’s unemployment rate. He’s even branded this the “Carolina Comeback.” But as it turns out, the Governor’s claims largely rest on treating jobs numbers like fruit—like apples, oranges, and cherries. In fact, the evidence for a Carolina Comeback is just plain rotten, and we’re still waiting for a real recovery in the state’s jobs market.

Most economists prefer to compare apples to apples by looking at job growth from year to year. And by any comparison of apples, the year stretching from December 2012 to December 2013 was worse than the year before.  Specifically, the year between December 2011 and 2012 saw the creation of 89,900 jobs, while the same period in 2013 saw the creation of just 64,500 jobs.

Even worse, over the last year, only three of every ten jobless workers who moved out of unemployment actually moved into a job in 2013. The rest just left the labor force altogether. Since December 2012, the labor force contracted by 66,500 workers, more than 1.5 percent, to the lowest levels in three years. At the same time, only 32,600 unemployed workers found employment. And all this while the state’s working age population continued to grow.

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NC Budget and Tax Center

At the heart of the American Dream is the idea that hard work is supposed to pay off—that anyone who works a full time job should be able to make ends and achieve upward mobility over the course of their lives. As discussed in the most recent issue of Prosperity Watch, however, seismic shifts in the global economy away from manufacturing and towards services have pushed this dream further and further away from too many of North Carolina’s workers. See the latest Prosperity Watch for details.