Prosperity Watch Issue 34, No. 2: Drop in North Carolina metro unemployment rates mostly due to shrinking labor force, not to unemployed finding work

Despite falling unemployment rates over the course of 2013, most of North Carolina’s metro areas are still waiting for a meaningful jobs recovery. This is largely because the overwhelming majority of unemployed workers in metro North Carolina didn’t move into employment, they moved out of the labor force altogether. In fact, all 14 of the state’s metros saw their labor forces shrink from December 2012 to December 2013, despite seeing their combined populations actually increase over the same period.

If the metros were truly seeing big improvements in unemployment, we would expect to see the number of employed people grow by the same amount that the number of unemployed people goes down. Unfortunately, this is just not the case. In 11 of 14 of the state’s metro areas, the drop in the unemployment rate over the past year was driven by a shrinking labor force and not by large-scale employment growth.  

Moreover, in 6 of the 14 metro areas in the state the labor force shrunk by a magnitude greater than the number of those leaving unemployment. That was because in those areas the number of employed persons as well as unemployed persons both declined.

As in the state at large, these troubling trends in the metros are due mostly to the fundamental lack of available job opportunities exacerbated by weak overall job creation. In fact, in ten metros areas, more jobs were created from December 2011 to December 2012 than from December 2012 to 2013.

Highlights include:

  • In Wilmington, less than 14 percent of the drop in unemployed people over the past year came from those workers moving into jobs, despite seeing its unemployment rate fall from 10 percent to 7.1 percent. The other 86 percent simply dropped out of the labor force altogether, due to the lack of available jobs for workers. Wilmington actually created 1,900 more jobs in 2012 than in 2013.
  • Although Winston-Salem saw its unemployment rate drop from 8.8 to 6.1, none of the drop in unemployed people over the past year came from those workers moving into jobs. In fact 253 employed persons lost employment in that metro area and Winston-Salem actually created 900 more jobs in 2012 than in 2013.
  • In Greensboro, only 16 percent of the of the drop in unemployed people over the past year came from those workers moving into jobs, despite seeing its unemployment rate fall by 2.9 points. The other 84 percent simply dropped out of the labor force altogether.
  • Although Asheville saw its unemployment rate drop 2.5 points over the last year, less than 22 percent of the drop in unemployed people over the past year came from those workers moving into jobs. The other 78 percent simply dropped out of the labor force altogether.  Asheville actually created 1,700 more jobs in 2012 than in 2013.
  • In four metro areas–including Raleigh, Charlotte, and Durham–just over half of the drop in unemployed people over the past year came from those workers moving into jobs.  A still troubling result but one that signals the strength of improvement experienced in the state’s most urban areas.

From these trends, it is clear that too many of the state’s metro areas are still waiting for a jobs recovery—and the fact that 2013 failed to see more job creation than the year before suggests the problem is only getting worse.
 

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