Prosperity Watch, Issue 7
Prosperity Watch Issue 7, No. 3: Change in Tuition and Student Debt
During the Great Recession
Since the start of the Great Recession, household incomes have failed to keep pace with the rising cost of attending college and associated living expenses, including rent, transportation and utilities. Tuition increases, which have been in response to steep State budget cuts to higher education, have outpaced inflation and increases in financial aid. The result: students are relying more heavily on student loans, including private loans with higher interest rates.
During the 2007-08 school year to 2009-10 school year, in-state tuition at a public four-year college in North Carolina increased approximately 5 percent. Yet, the average debt for graduating seniors who attend a public four-year college in North Carolina increased 20.5 percent during this time period (see the chart below). Recent UNC System-approved tuition hikes will likely translate into an uptick in students’ reliance on borrowed money.
Financial constraints may lead some low- and moderate-income students to work long hours while earning a degree. A 2009 study found that the optimal study-work balance for a full-time student is part-time employment of less than 15 hours per week. Working more than 15 hours per week puts a full-time student at risk of dropping out.
Source: The University of North Carolina, Statistical Abstract 2007-08 to 2009-10; and The Institute for College Access & Success.
Prosperity Watch Issue 7, No. 2: Unemployment Up in North Carolina since Last Year,
Even as it Declined Nationally
In November of 2010, North Carolina’s unemployment rate fell to 9.8 percent, the first time in nearly three years that North Carolina’s unemployment rate did not exceed the national rate.
One year later, the US unemployment rate fell in November to 8.6 percent. The most recent estimate for North Carolina, from October, put the state unemployment rate at 10.4 percent.
What happened over the past year that caused North Carolina’s unemployment rate to rise even as the national unemployment rate fell?
The unemployment rate is defined as the number of unemployed workers as a share of the total labor force. (The labor force is the sum of employed persons plus unemployed individuals who are actively seeking work.) For the unemployment rate to fall, either the number of unemployed workers must decrease or the size of the labor force must increase.
Nationally, the unemployment rate fell over the past year because the number of unemployed workers fell even as the size of the labor force remained essentially the same. In North Carolina, the unemployment rate rose over the past year because the size of the labor force increased faster than the economy created jobs, thus increasing the number of unemployed workers.
Because North Carolina’s labor force is growing, the state’s economy must create jobs at a faster pace than the country as a whole to bring the state’s unemployment rate down towards the national rate.
Prosperity Watch Issue 7, No. 1: Pre-recession employment levels may take
longer than previously reported
Recent analysis by IHS Global Insight, reported in the Wall Street Journal, estimates that North Carolina will return to its pre-recession employment peak in the 3rd quarter of 2015. The data released on Tuesday of last week by the Bureau of Labor Statistics suggest that the state’s significant jobs deficit is growing and thus the time it will take to achieve an improved jobs outlook may, in fact, be much longer.
When the recession began in December 2007, North Carolina had 4,171,800 jobs. Since then, the state has experienced 34 months of job loss. As of October 2011, North Carolina has 300,500 fewer jobs. North Carolina's jobs deficit, or the difference between the number of jobs North Carolina has and the number it needs to regain its pre-recession employment rate, is 511,300.
Source: Economic Policy Institute analysis of Bureau of Labor Statistics data, October 2011.