NC Budget and Tax Center

Unemployment much higher than official rate

North Carolina’s economy is still not creating enough job opportunities. According to the latest unemployment figures, there are more than a quarter million people actively looking for work across the state. However, the problem goes much deeper. As shown below, the unemployment rate is likely closer to 10% if we account for all of the people who have left the labor force because there are not enough job opportunities, a group commonly referred to as “missing workers”.

Missing Workers Graphic - Feb 2016

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Commentary

Economist: Persistent unemployment still holding down NC wages

jobseconomyThe McCrory administration keeps peddling the idea of a “Carolina Comeback,” but it sure doesn’t feel like it’s happening on the ground. Maybe that’s because despite the regular announcements from the Governor’s office of business start-ups and expansions (sometimes with as few as 10 or 15 jobs), the state continues to suffer from a toxic combination of massive layoffs like the ones at Freightliner and MillerCoors Brewing and depressed wages for middle class workers.

New analysis from economist Patrick McHugh at the Budget and Tax Center confirms this hard truth:

North Carolina’s economy continues to leave many people looking for work, and even more hoping for a raise. While the national unemployment rate dipped below 5 percent for the first time since the Great Recession, North Carolina’s rate remained unchanged in January, holding at 5.6 percent.

“We keep hearing that robust wage growth is just around the corner but, if that’s true, we might be in a traffic circle.” said Patrick McHugh of the North Carolina Budget and Tax Center. “North Carolina’s economy simply isn’t creating enough jobs for everyone that wants to work, and that’s holding down wages for many people who have a job.”

Important trends in the September data also include:

  • North Carolina pay remains below the national average. The average weekly paycheck in North Carolina came in roughly $100 below the national mark in January. While wages in North Carolina have historically been lower than the national average, the gap has expanded substantially in the last few years. Compared to January 2012, when North Carolina weekly wages were roughly $58 below the nation, the gap has widened considerably.
  • Still more North Carolinians out of work than before the Great Recession: There were over 265,000 North Carolinians looking for work in September, approximately 38,500 more than before the Great Recession.
  • Percent of North Carolinians employed still near historic lows, and below the nation: North Carolina remains well below the level of employment that was commonplace before the Great Recession. In the mid-2000’s, employment levels reached a peak of about 63 percent. The percent of North Carolinians with a job remains below the national average, as it has been since the Great Recession

For more context on the economic choices facing North Carolina, check out the Budget & Tax Center’s weekly Prosperity Watch platform.

Commentary

The best op-ed of the weekend: NC’s disastrous lab experiment gone awry

unemploymentIn case you missed it, there was a great op-ed in Raleigh’s News & Observer over the weekend by Kevin Rogers of the group Action NC. In it Rogers explores the disastrous folly of North Carolina’s three-year-old experiment with a decimated unemployment insurance system.

After documenting some of the destruction the changes have inflicted on the state’s workers and its workforce, Rogers put it this way:

“This is all to say that the drastic and draconian unemployment insurance cuts North Carolina made in 2013 were a complete failure. The share of people with jobs in North Carolina did not grow nearly as quickly as it did in states that did not make these cuts, and there was no discernible increase in the share of the population with a job. Instead, tens of thousands of job seekers were forced into part-time jobs, forced into underemployment or fell out of the job market completely. In all cases, these people would not show up in the official unemployment numbers but are certainly still unemployed by any sensible measure.

Moreover, the most vulnerable of our population fared even worse than the average. While the official unemployment rate for whites in the state was 4.1 percent in the second quarter of 2015, the unemployment rate for blacks and Hispanics was 9.3 percent and 10.1 percent, respectively. That means the cuts to unemployment benefits hit minority households more than twice as hard as white households.

But the story doesn’t end there. Women, who already face across-the-board wage disparity, also face an unemployment disparity. While it is true that women have regained a large number of the jobs they lost during the Great Recession, their gains are highly concentrated in low-wage occupations. Sixty percent of the increase in employment for women between 2009 and 2012 was in the 10 largest occupations that typically pay less than $10.10 per hour. In contrast, these 10 low-wage occupations accounted for only 20 percent of men’s employment growth over the same period.

If the states are truly laboratories of democracy, then North Carolina is surely the domain of mad scientists. When the goal of a policy is to get more people employed quickly, and the result is more people without jobs, it matters little with what catchy term the results are branded. For those still unemployed and without assistance, it’s easy to see where the experiment has failed.

The mad scientists in the General Assembly still have time to fix their creation before it becomes full-fledged Frankenpolicy. They should.”

You can read Rogers’ entire essay by clicking here.

Commentary

Treading water: McCrory job announcements running up against a tide of plant closures

jobs adAnyone who follows state government has grown used to the regular press statements from politicians celebrating new private industry job creation announcements. For Governor McCrory, it’s almost a ritual. Scarcely a week goes by these days in which the Guv isn’t announcing (and taking credit) for the creation of jobs in one community or another.

A few (like this December announcement of the expansion of a home appliances outfit in New Bern that could create 460 jobs over five years) are relatively impressive, while many others (like this November announcement of the creation of 27 jobs over three years) are, well, not so exciting. At times, one is led to wonder whether the Guv will take to issuing a press statement every time a new Starbucks opens somewhere.

That said, one can hardly blame McCrory for trying. The man clearly sees himself as the state’s head cheerleader and that is no doubt an important part of his role.

It’s important, however, for North Carolinians not to get too swept up in (or impressed by) the apparent drumbeat of successes emanating from the administration. As recent news headlines remind us, there is a powerful current of job losses flowing in the opposite direction.

Consider the following: During the final quarter of 2015, the Governor issued nine press statements celebrating new job announcements that would create quite a few jobs over three and five-year periods. All told, it was one of the better three month periods in recent memory. Even so, when one pro rates the job claims over the specified time periods, the numbers are fairly modest, with roughly a total of 650 jobs to be created in 2016. And, of course, all of those numbers are just projections.

Now contrast that number with just two hard and fast recent announcements on the other side of the job ledger: the announced MillerCoors plant closing in Eden and the planned Freightliner layoff in Rowan County. Between those two events, that’s a loss of 1,456 jobs right way. What’s more, thanks to the disastrous unemployment insurance cuts imposed by Gov. McCrory and the General Assembly in recent years, the help for the newly jobless and their communities will be minimal-to-non-existent.

The take away: Neither the recent plant closures nor McCrory’s sunny announcements present a complete picture of the economy of course. Moreover, it’s certainly okay for the Guv to play cheerleader and hold lots of ribbon cutting events. Ultimately, however, as was explained in yesterday’s Weekly Briefing, no amount of positive spin or cheer leading can make up for a lousy overall situation.

In 2016, North Carolina desperately needs a comprehensive approach to growing an economy that works for everyone and leadership from elected officials on a host of fronts to make it happen. As the numbers above indicate, merely slashing taxes to help the well-off and repeatedly declaring victory is nowhere near enough.

Commentary

NC announces $600 million in new business tax cuts even as jobless struggle

As this week’s edition of The Weekly Briefing made plain, state leaders remain absurdly out of touch with the economic reality on the ground in North Carolina. The following announcement from colleagues at the N.C. Justice Center highlights this problem once more

Jobless workers struggle even as Division of Employment Security announces $600 million in tax cuts to employers
Employment remains more than 4 percentage points below pre-recession levels, according to October data 

Jobless workers continue to struggle with an economy that fails to provide enough jobs and an unemployment insurance system that is ill-equipped to deliver partial wage replacement to stabilize the economy, even as North Carolina’s Division of Employment Security announced $600 million in tax cuts to employers.

Employment levels as a share of the population remains more than 4 percentage points below pre-recession levels, according to today’s announcement on labor market conditions for October 2015.

Last month’s state employment rate was 5.7 percent, the same level as one year ago. However, the number of unemployed North Carolinians has increased over that period by 11,591 jobless workers. The national unemployment rate was 5.0 percent in October, dropping by 0.7 percentage points over the year.

“North Carolina should not be issuing tax cuts for employers when we have failed to reach what are generally agreed to be safe levels for our state’s Unemployment Insurance Trust Fund,” said Alexandra Forter Sirota, Director of the Budget & Tax Center, a project of the North Carolina Justice Center. “Instead, our state policymakers need to re-balance their approach to ensure the system can deliver partial wage replacement to jobless workers and in so doing serve as a stabilizing force in the economy.”

Important trends in the October data also include:

  • The percent of North Carolinians employed is still near historic lows, and below the nation. October numbers showed 57.5 percent of North Carolinians were employed, leaving the state well below employment levels commonplace before the Great Recession. In the mid-2000s, employment levels reached a peak of about 63 percent. The percent of North Carolinians with a job remains below the national average, as it has been since the Great Recession.
  • There are still more North Carolinians out of work than before the Great Recession. There were more than 270,000 North Carolinians looking for work in October, almost 50,000 more than before the Great Recession.
  • North Carolina’s unemployment insurance system only provided temporary wage replacement to 22,545 North Carolinians. The number of jobless North Carolinians receiving unemployment insurance has dropped precipitously since 2013, ranking us 49th in the country on this measure and hindering the ability of the program to serve as a stabilizing force in the economy.

“North Carolina’s labor market is still too weak to ensure jobs are available for all those who seek employment,” Sirota said. “This affects all of us, as wages are falling short of the growth needed to boost the economy in the immediate and long-term.”

For more context on the economic choices facing North Carolina, check out the Budget & Tax Center’s weekly Prosperity Watch platform.