MEDIA RELEASE: Mixed news in latest job report

Progress made on labor force decline, but job growth remains anemic, concentrated in low-wage industries

RALEIGH (June 20, 2014) -- There are both positive signs and significant causes for concern in May’s unemployment report released today by the Division of Employment Security, says a labor market analyst.

Although progress has been made on the state’s historic declines in the labor force, said Allan Freyer, Policy Analyst with the NC Budget & Tax Center, the state’s unemployment rate rose to 6.4 percent last month and job growth over the last year remained anemic. Additionally, job growth was concentrated in those industries that pay wages well below the average state wage.

While the labor force continued to decline over the last year, dropping by 8,000 since last May, the good news is that the decline has gotten smaller each consecutive month since January. This suggests that unemployed workers who dropped out of the labor force in 2013 due to the lack of available job openings are starting to return to the workforce as the economy continues to slowly improve.  As long as there are three unemployed workers for every one available job opening, however, the labor force decline will remain a serious problem for the state.

Continued improvement in the labor force will require the robust creation of enough job opportunities to meet the needs of the state’s unemployed workers,” said Freyer. “This is an open question given the state’s anemic rate of job growth, which appears largely driven by the steadily improving national economy.” 

For North Carolina to reverse the historic job losses of the Great Recession, the state will need to create jobs at a significantly faster clip than the national average. Unfortunately, this month’s jobs report shows North Carolina creating jobs at almost an identical rate as the nation as a whole.  While the creation of 77,600 jobs since last May is certainly movement in a positive direction, it’s virtually indistinguishable from the 1.8 percent rate of job creation seen by the nation as a whole. 

At the current rate of job growth, it will take North Carolina another year to completely replace the 300,000 jobs lost during the recession. And it will take another 7 years at this rate to create enough jobs to keep up with the state’s 10 percent population growth since 2007. 

Another troubling sign is the fact that many of the newly created jobs pay ultra-low wages. Just three industries accounted for almost half of the state’s total job growth over the last year, and all of them paid significantly below the state’s average wage of $21.50 per hour. Administrative and Waste Management accounted for 22 percent of all job created last year and paid just $15.83 an hour. Jobs created in Retail Trade accounted for 11 percent of the state’s total employment growth and paid $12.60 per hour, while ultra-low-wage Accommodation and Food Services accounted for 15 percent of the state’s job growth and paid just $7.55 an hour. 

The last year has been a boom-time for ultra-low-wage work. As long as North Carolina keeps creating the lion’s share of jobs in industries that pay poor wages, the state’s long-term recovery remains in doubt,” said Freyer. “A low-wage labor market just doesn’t put enough money into the hands of workers to adequately support local business growth. Low wages mean fewer customers and lower sales, which ultimately will put the brakes on hiring.”

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

 

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