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NC Budget and Tax Center

The March employment numbers out today show another month of positive, but relatively lackluster economic performance in North Carolina. The unemployment rate in North Carolina has now been essentially flat for the last five months and the number of unemployed North Carolinians has actually increased in the first three months of 2015.

According to analysis of the latest labor market data by the Budget & Tax Center, employment levels have edged up in the last year, but are still well below the pre-recession norm. In fact, a smaller share of North Carolinians have a job today than during the worst of the recession that followed the 9/11 attacks.

“The North Carolina economy has been idling along for several months and continues to be weaker than it was in 2007,” said Patrick McHugh of the North Carolina Budget and Tax Center. “The worry now is that we’ll see a new normal, with lower levels of employment and paychecks that don’t go as far.”

Other highlights of the March data include:

  • Unemployment rate not making gains: After falling dramatically from 2009 through the third quarter of 2014, the state and national unemployment rates have flattened out in recent months. Even while the state continues to add jobs, growth is not enough to push unemployment below the 5% threshold that most economists see as the top-end of a healthy labor market. Part of the flattening out may be attributable to people coming back into the labor force, which would be good news. However, it is still troubling to see the labor market falling well short of full employment.
  • Still more North Carolinians out of work than before the Great Recession: Even though the ranks of the unemployed have declined over the past year, there are still more than a quarter-million North Carolinians looking for work, approximately 10% more than at the end of 2007.
  • Percent of North Carolinians employed still near historic lows: March numbers showed 57.5% of North Carolinians were employed, which is up 1 percentage point from March 2014. However, this still leaves North Carolina well below the level of employment that was commonplace before the Great Recession. In the mid-2000’s, employment levels were generally between 62% and 63%. Moreover, the level of employment in North Carolina has fallen behind the national average, when the state was generally at or above the nation in the pre-recession period.

For more context on the current state of the North Carolina economy, check out a recent report that reviews the last seven years of economic data and the Budget & Tax Center’s weekly Prosperity Watch platform.

 

Commentary

Many North Carolina workers are locked in low-wage jobs that don’t pay enough to make ends meet, even though they’re working full-time. Over the long-term, state lawmakers need to implement a comprehensive strategy that creates pathways out of this low-wage economy. But right now, they can provide an immediate boost to working families by increasing the minimum wage from the current level of $7.25 an hour. Raising the wage floor would put more money in the pockets of workers, increase sales for local businesses, and strengthen the state’s overall economic performance, without increasing unemployment, according to a new fact sheet released by the Justice Center yesterday.

Most importantly, raising the minimum wage benefits adult workers and their families, providing a critical antidote to the ongoing boom in low-wage jobs. Almost 6 out of every 10 new jobs created since the end of the recession are in industries that pay poverty-level wages. More than 80 percent of new jobs created since 2009 don’t pay enough to cover life’s necessities, including housing, healthcare, groceries, and gas costs. Raising the minimum wage would make the difference between destitution and self-sufficiency for thousands of workers on the bottom rung of the state’s labor market.

One critical effect of raising the minimum wage for these low-income workers is the boost to the entire economy that comes from putting more money in the pockets of large numbers of those workers most likely to spend it. For example, boosting the wage floor to $10 an hour would affect approximately 1 million workers in North Carolina. And because of the boom in low-wage work, the vast majority of those North Carolinians benefitting from the wage increase are no longer the part-time, teen-aged workers who once filled the bulk of entry-level jobs in past generations. Now, more than 85 percent of those benefitting from a minimum wage increase are workers older than 20 years of age, and more than half work full-time. A half-million children in the state would experience increased security thanks to their parents’ higher wages—a critical support given that North Carolina has the eighth highest percentage of children living in poverty in the nation.

As low-income workers spend their bigger paychecks, local businesses will benefit, growing the economy without hurting overall employment. Economists have repeatedly found that those states that increased their minimum wages have seen better economic performance, lower unemployment, and higher job creation rates than those states that didn’t raise their wages, controlling for regional economic trends. The evidence clearly and repeatedly contradicts critics who claim that increasing the minimum wage forces employers to offset greater payroll costs by reducing the number of employees.

In fact, raising the minimum wage creates more customers, more sales, and bigger profits. For example, recent studies have indicated that raising the minimum wage to $10 an hour would increase paychecks for North Carolina’s workers by $2 billion a year. That’s $2 billion in increased consumer spending at local businesses, boosting business sales, business profits, and creating more than 5,000 new jobs.

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NC Budget and Tax Center

For all of the positive growth numbers touted at the statewide level in the last year, the recovery ranges from partial to virtually nonexistent in many parts of the state. The headline unemployment rate dropped for most counties between February 2014 and this year, but unfortunately that is not a sign that all in well. As can be seen when you look at the current labor market conditions and how counties stack up to where they were before the recession, there are many communities where employment is still below pre-recession levels, some communities that actually lost jobs during the last year, and people looking for work outnumber job openings in most counties.

Most counties have not returned to pre-recession levels of employment. While the last few years have seen the state make some good economic strides as the national economy has continued to improve, it has not done enough to get most communities back to the level of vitality that existed before the Great recession. The majority of counties in North Carolina (70 out of 100), had fewer jobs in February 2015 than they did in 2007. In fact, the unemployment rate is still higher now than it was in 2007 in more than 80 counties across the state.

Unemployed people outnumber job openings in almost every county. Only 8 counties in North Carolina have at least as many job openings as unemployed people. Many counties have 2 or 3 unemployed people for every job opening, and in some counties there are as many as 5 or 6 unemployed people competing for every job. The number of people who are looking for work did come down in most counties from February 2014 through this year, but there are still far more people looking for work than there are jobs. In fact, roughly three-quarters of the counties had more people looking for work in February of this year than they did in 2007. There are still too few jobs for those who want to work which not impacts jobless workers but everyone as employers aren’t compelled to provide wage increases to keep or attract talent.

Many counties took a step back over the last year. While it is cause for pause that most counties have not returned to pre-recession levels of employment, the fact that almost half of the counties (47) lost employment from February of 2014 to February of 2015 is cause for a full-on double-take. 2014 was the strongest year for job creation since the start of the Great Recession, yet nearly half of the counties lost jobs during that time. That’s an extremely alarming sign. It is natural to expect some counties to grow faster than others, but a truly strong growth period should not be leaving so much of the state worse off.

All told, the February county labor market data show that North Carolina is not uniformly on the road to prosperity. There are pockets of very strong growth in and around the major metropolitan areas, but the labor market outside of the urban centers is much weaker. As the General Assembly talks about another round of tax cuts, and spending more on incentives, remember that these have been the proposed answers for several years, and they have not delivered the goods for many communities in our state.

Commentary

If you’re an unemployed or underemployed North Carolinian trying to get by in a community that’s never recovered from the Great Recession, take heart: things are actually just ducky according to conservative think tanks — no matter what your eyes and bank account tell you.

For “confirmation” check out this morning’s Locke Foundation missive from the group’s former director: “Job Growth Sizzled Last Year.” The column is just the latest in an ceaseless series of articles designed to spin the situation in North Carolina and convince people that two obvious things are not true: a) The state economy continues to struggle to generate good jobs to replace the ones lost in the Great Recession and b) the North Carolina recovery that has occurred is mostly just a reflection of national trends.

Happily, some analysts and experts aren’t just trying to cover up for the destructive and counter-productive policies of the McCrory administration and the General Assembly (which, together, have about as much to do with the limited good news that has taken place in the state as they do with the price of tea in China).

Patrick McHugh of the Budget and Tax Center, for instance, explained what’s really going on in the North Carolina economy Monday in this new report: “Growth Without Prosperity.” This is from the release that accompanied the report:

“The worst of the Great Recession is behind us, but the damage lingers, weighing down communities and families across North Carolina. We are now seven years removed from the financial crisis of 2008, but in North Carolina wages are down, job creation is lagging, and many communities are still stuck in recession. Read More

News

srs-unemployment3While it is positive news that fewer North Carolinians were unemployed in 2014 than in 2013, the reality is that we are still far from pre-recession employment rates.

As the Budget and Tax Center pointed out a in a release today:

Despite the decline in metro area unemployment year over year, there were still more unemployed North Carolinians in nearly all metro areas in December 2014 than there were in December 2007.

The latest data from the BTC’s County Labor Market Watch and Recession Watch shows that:

Many counties were better off in December 2007 than December 2014. There are still 24 North Carolina counties with unemployment rates higher than what they had in December 2007. There are 60 counties that had more unemployed workers in December 2014 than they did in December 2007, and 72 counties had fewer people in the labor force this past December than in December 2007.

Based on the data, slightly over half of North Carolina counties have an unemployment rate that is higher than the statewide 5.5 percent unemployment rate. Graham County at 12.3 percent has the highest unemployment rate in the state. These numbers are evidence that while the employment situation is improving in some counties, others are clearly not getting the help they need to recover from the recession.

“Any approach to badly needed economic development must consider this uneven recovery,” said Alexandra Forter Sirota, director of the BTC. “Lawmakers must pursue tools that deliver targeted support to grow opportunity in communities that continue to struggle now seven years after the start of the Great Recession.”