MEDIA RELEASE: Drop in unemployment rate due to shrinking labor force

Only 1 out of every 10 formerly unemployed workers found employment over last year

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.  A mathematical quirk in how the unemployment rate is calculated means that whenever the labor force goes down, the unemployment rate can also go down, even if genuine joblessness remains high.  That’s what happened from December 2012 to December 2013—only 13,414 unemployed workers found employment. The rest just gave up and dropped out of the labor force, meaning that just 11 percent of the drop in unemployed workers resulted from the jobless finding jobs.



Only 1 out of every 10 formerly unemployed workers found jobs in the last year," said Allan Freyer, Public Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center. “At a time when there is just one available job opening for every three unemployed workers who need it, it’s no surprise that so few of North Carolina’s jobless workers are actually finding jobs.”



Even more troubling is the reality that job creation in 2013 performed far worse than in 2012, suggesting that North Carolina’s recovery is stalling. The year between December 2011 and 2012 saw the creation of 89,900 jobs, while the same period in 2013 saw the creation of 64,500 jobs.



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, or that 2013 represents a special year for the state’s labor market. But the reality is far different,” said Freyer.  “Across every meaningful measure of labor market progress, 2013 was a worse year than 2012.” 



Given seasonal hiring patterns, most economists prefer to compare the year-over-year. And when we compare the second half of 2012 to the same period in 2013, we find that 2012 performed better—2,000 more employed people and 5,000 more jobs from July to December 2012 than over the same period in 2013. 



Lastly, it is important to note that we should interpret all the numbers from December with great caution, as all 2013 survey data will be revised late next month.

FOR MORE INFORMATION, CONTACT: Allan Freyer, allan@ncjustice.org, 919.856.2151; Jeff Shaw, jeff@ncjustice.org, 503.551.3615 (cell).
 

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