RALEIGH (October 19, 2012) – Public sector layoffs erased private sector job gains in September, according to new unemployment numbers released by the Division of Employment Security today. These layoffs are largely responsible for the stubbornly high unemployment rate, which showed a negligible decrease from a summer high of 9.7% in August to 9.6% last month. While this improvement is certainly a positive sign, the state has failed to create enough total jobs to reduce unemployment to where it was in April, May, and June, when the jobless rate clocked in at 9.4%.
Part of the problem is the sluggish rate of private sector job growth, coupled with the long-term erosion of government employment. Although North Carolina experienced private sector job growth last month with the creation of 1,500 new jobs (seasonally adjusted), these gains were almost completely wiped out by the 1,400 reduction in public sector employees — 98% of which came from state government.
Looking at government employment over the last year, we see a similar trend. Without the 5,500 public sector layoffs experienced in the last 12 months, the number of total nonfarm jobs created in North Carolina since September 2012 would have been 17% higher, and the state’s unemployment rate would have been 9.4% — unchanged from the jobless rate in April, May, and June.
“While the new report certainly demonstrates a small measure of progress, we shouldn’t start celebrating yet, since we haven’t yet reclaimed the ground lost over the summer. A big part of this story is the continuing layoffs of public sector employees in the middle of an already challenging economic recovery,” said Allan Freyer, Public Policy Analyst with the Budget Tax Center, a project of the NC Justice Center. “Just as with private sector layoffs, government layoffs increase the number of people out of work. Given that there are already nearly three times as many people looking for work than there are job openings, these public sector layoffs only serve to increase overall unemployment.”
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