MEDIA RELEASE: Jobs report shows problems beyond a mere summer slump

A shrinking labor force is the main factor behind NC's stagnant unemployment rate

RALEIGH (July 17, 2013) — Unemployment numbers released today for June show problems beyond a summer slump. North Carolina’s labor market may be experiencing longer-term problems, according to an analysis of June’s jobs numbers released by the N.C. Division of Employment Security today. 

Although the unemployment rate remained stagnant at May’s elevated levels (8.8 percent), the number of employed workers actually fell by 11,000 in June, while the number of unemployed began climbing again. This suggests that job creation is continuing to stumble after superficial gains last spring.

North Carolina’s shrinking labor force is the primary factor in the state’s stagnant unemployment rate, said Allan Freyer, a policy analyst with the Budget & Tax Center.  In a sign of longer-term stagnation in the state’s economy, rather than just a temporary ”summer slump” in job creation similar to those of 2011 and 2012, North Carolina’s labor force—the pool of workers with jobs or looking for one—is continuing to shrink, despite overall population growth. 

“June’s job numbers are cause for concern. North Carolina is experiencing long-term stagnation in job creation, not just a summer slump,” said Freyer.  “And as long as there are three unemployed workers for every one job, we’re not going to see much improvement.”

More than 10,300 workers dropped out of the labor force last month, and when combined with the loss of 35,000 workers who dropped out over the past three months, the state’s work force is now at the lowest level since April 2012, erasing almost an entire year’s worth of gains. 

Long-term job creation is also struggling. Over the last year, the number of employed people increased by an anemic 29,000. This amounts to little more than 2,000 new jobs each month, and clearly insufficient to replace the 126,000 jobs lost since the Great Recession began. Even more troubling, the total number of employed people in North Carolina is at the lowest levels since October 2012, suggesting that North Carolina's economy is continuing to struggle in generating long-term sustainable job creation. 

An additional cause for concern is the fact that the state’s fastest growing industry pays the lowest wages.  Over the last year, Leisure and Hospitality Services grew by 25,400 jobs, accounting for almost half of the total employment growth in the state.  Unfortunately, this industry pays $8.30 an hour, more than $12 below the statewide average—suggesting that the state’s growth opportunities are in ultra-low wage jobs.

“Today’s jobs report makes it clear that the majority of all job creation is occurring in industries that don’t pay a living wage,” said Freyer. “It’s hard to see how the state’s economy can continue to improve without significant income growth to support consumer spending at local businesses.”

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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