Archives

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.

Read More

Uncategorized

The fiscal policy wonks at the Budget and Tax Center are out with a new and detailed analysis of the impact of last year’s harshest-in-the-nation cuts to unemployment insurance that were imposed by Gov. McCrory and the General Assembly. The findings? They ain’t pretty:

“Cuts to unemployment insurance in North Carolina have made it harder for jobless families to make ends meet and get back on their feet in an economy that is still providing too few jobs to go around. Contrary to what proponents of the cuts claim, a recent decline in unemployment in North Carolina is largely driven by people leaving the workforce because they cannot find jobs, not due to employment growth. And far from helping the state’s economy, the cuts have left thousands of North Carolinians with less money to spend on food, clothing and other necessities, which also harms local businesses.

Specifically:

• The average weekly benefit for unemployed North Carolinians plunged Read More

Uncategorized

Not that it’s at all surprising, but new analysis from experts confirms that Gov. McCrory and his allies are dead wrong once again with their latest crowing about the drop in North Carolina’s official unemployment rate. Put simply, thee Guv is confusing a labor market collapse for good news. This is from the wonks at the N.C. Budget and Tax Center:

“RALEIGH (January 28, 2013) — North Carolina’s unemployment picture is much worse than it appears on the surface, according to new numbers released by the N.C. Division of Employment Security today. Although the unemployment rate dropped to 6.9 percent in December, this is due almost entirely to a historic collapse in the state’s labor force, not to genuine gains in employment.

Over the last year, the labor force shrunk by 110,930 workers—more than 2.5 percent—to the lowest levels in three years.  Read More

NC Budget and Tax Center

It’s the myth that will not die.

In the ongoing debate over the impact of last year’s draconian cuts to unemployment benefits, we keep hearing the story that reducing benefits for the jobless has helped reduce the unemployment rate.

If only this were true.

While the unemployment rate has undoubtedly fallen, this is because unemployed workers have simply fallen out of the labor force, rather than moving into employment—a trend the unemployment rate simply doesn’t take into account. Just this point was made yesterday in a New York Times piece by Annie Lowrey profiling North Carolina’s economy, which noted that for every unemployed person who moved into employment, another two unemployed people gave up looking for work and dropped out of the labor force altogether.

In fact, the state’s labor force contracted more than 2.5 percent in 2013 at the same time that the state’s population grew by almost 1 percent.  And anytime the labor force shrinks while the population grows, the economy is moving in the wrong direction.

If the Times piece gets it right about the connection between unemployment benefit cuts and the shrinking labor force, it is a bit too trusting of Governor McCrory’s claims that his plan helped boost job creation in the state.

Perhaps Ms. Lowrey should have noted Ned Barnett’s important point from last week—by any measure, employment growth in 2013 was the weakest of any year since the end of the recession. North Carolina created just 37,700 jobs from January to November last year, almost half the 66,000 jobs created over the same period in 2012 and still short of the jobs created in 2011 and 2010. At the rate of employment growth achieved in 2013, it will take another 13 years for the state to create enough jobs to replace all those lost during the recession and keep up with population growth.

If Governor McCrory was correct that cutting unemployment benefits forced unemployed workers to find work, then we would expect to see unemployed workers moving into employment. But we don’t—we actually see the opposite.  There were actually 9,000 fewer people employed in November than in January—again, the worst performance since 2010. This means that unemployed people aren’t moving into jobs, they’re just dropping out of the labor force altogether.

Read More

Uncategorized

Trickledown economic theory and the three years of state budget and tax cuts to which it has given rise continues to work wonders for the North Carolina economy…not.

This just in from the state Department of Commerce:

“RALEIGH — The state’s seasonally adjusted July unemployment rate was 8.9 percent, increasing 0.1 of a percentage point from June’s revised rate. The national rate declined to 7.4 percent from June’s 7.6 percent.”

Of course, in fairness, the notion that state policies can have any kind of significant near-term impact on the overall employment rate is as misplaced now as it was when conservatives were lambasting the Perdue administration. Save for the actual jobs it creates through public employment, the main impact state leaders can have is on: a) the long-term picture (where investments in education and infrastructure are key) and b) easing the suffering of the jobless and their families.

That said, the performance of conservative state leaders in both of these latter two areas has been truly abysmal so prospects seem likely to remain relatively dim for the foreseeable future.