MEDIA RELEASE: Unemployment rate improves, but labor force continues to contract

RALEIGH (May 18, 2012) – North Carolina’s unemployment rate dropped to 9.4 in April, a 0.3-point drop since last month and a 1.2-point drop over the last six months, according to new labor market data released by the Division of Employment Security. Unfortunately, this apparent improvement masks several troubling trends in the labor market, including falling labor force participation and stagnant job creation relative to the state’s population growth.

Although the number of jobless workers dropped by 12,686 workers in April is unquestionably positive news, much of the drop in the state’s unemployment rate last month resulted from a less positive trend, an 11,215-person contraction in the labor force—the number of prime-age workers who are either employed or looking for work. Perhaps even more troubling, this drop comes on top of an additional drop in labor force participation in March, undoing most of the participation gains made since last October.

Additionally, the state’s share of total population currently employed fell to 56.6% last month, a level North Carolina has largely maintained since the formal end of the Great Recession in June 2009. This suggests that the state’s economy is creating just enough jobs to keep treading water, but nowhere near enough to keep up with population growth and replace those jobs lost during the recession.

Coupled with the recent Bureau of Labor Statistics report that only 1 job opening exists for every 3.3 people looking for work nationwide, these employment and participation trends suggest that the number of discouraged workers—those who drop out of the labor force after searching unsuccessfully for work for 12 months or more—is growing.

“Although the dropping unemployment rate is unquestionably good news, North Carolina’s labor market still faces the troubling trends of declining labor force participation and weak job creation,” said Allan Freyer, Public Policy Analyst with the Budget and Tax Center, a project of the NC Justice Center. “When there is only one job opening for every 3.3 workers seeking employment, the state is certainly going to struggle to replace the jobs lost to the recent recession.”

FOR MORE INFORMATION CONTACT: Allan Freyer, Public Policy Analyst, allan@ncjustice.org, 919.856-2151; Jeff Shaw, Director of Communications, NC Justice Center, jeff@ncjustice.org, 503.551.3615 (cell)