Prosperity Watch Issue 11

Prosperity Watch Issue 11, No. 4: Western North Carolina bears brunt of job deficit

Although most communities in North Carolina are still struggling to recover from the recent recession, comparing the jobs picture across each of the state’s seven Economic Development Regions reveals that the 23 counties in the Western part of the state are experiencing the toughest road back to pre-recession employment levels.  Perhaps most obviously, the Western region has the highest average unadjusted unemployment rate—12.7%--which is two points higher than the similarly unadjusted state-wide average of 10.5%.  Additionally, the Western region is home to the counties with the first and third highest unemployment rates in the state (Graham, at 20.6% and Swain, at 19.4%).  As always, unadjusted data do not reflect changes in employment due to seasonal fluctuations

These abnormally high unemployment rates are largely attributable to the devastating impacts caused by the recent recession and the long-term struggle of these counties to replace the jobs lost over the past four years.  Unfortunately, the region has experienced the worst long-term employment losses of any other region in the state since the recession began in December, 2007—Western North Carolina’s total employment declined by 11.3%, compared to 8.9% in the state as a whole, and the region includes counties with the two highest levels of job losses—Graham at -24.7% and Rutherford at -25%.  

Much of this stubborn joblessness can be explained by the steep losses in manufacturing employment—the West has seen a-23.4% decline in this sector, while the state only lost 17.9%.  Manufacturing has traditionally served as the largest employer in many counties throughout the state, providing reasonable wages and requiring little in the way of training or education.  With the erosion of this employment base, workers are finding very little in the way of replacement jobs in other sectors, especially if they are unskilled.  This has been particularly true in Western North Carolina and helps explain both the high-than-average unemployment rate and the region’s long-term employment declines.

Prosperity Watch Issue 11, No. 3: North Carolina's Job Deficit Tops 530,000

Despite the positive economic news last week that the state’s unemployment rate dropped from 10.4% in December to 10.2% in January, North Carolina’s labor market is still struggling to recover from the Great Recession.

Since the recession’s onset in December 2007, North Carolina experienced 35 months of job loss and now has 227,500 fewer jobs than it did at the beginning of this period.  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 530,600. This includes the 227,500 jobs North Carolina lost plus the 303,100 jobs it needs to keep up with the 7.3% growth in population that the state has experienced in the 49 months since the recession began.

Prosperity Watch, Issue 11, No. 2: Fewer hours of work, lower wages for North Carolinians compared to nation

Despite an improvement in the state’s jobless rate, dropping from 10.4 percent to 10.2 percent in January, North Carolina’s economic recovery still has a long way to go, especially in comparison with the national economy.  In the months since the beginning of the Great Recession in December 2007, the state has significantly underperformed the national average in two key indicators—the average number of hours worked in a week and the weekly earnings gained in return for those wages. 

The average number of hours worked is an important measure that, while not often looked at, can provide real time understanding of what is happening in the labor market.  That is because employers tend to cut back overtime, move workers to part-time or reduce hours when demand declines.  And when demand expands, before hiring, employers are likely to add hours.  A positive trend in average hours worked is a good sign that demand is strengthening.

Although both the nation’s workers and the state’s workers have seen gains in since the recession, the average work week in North Carolina has consistently been shorter than the nation’s.

At the same time, North Carolinians earned less pay than their counterparts across the nation, except for a brief stretch in late 2009.  For example, in March 2010, 40 months after the start of the recession, North Carolinians worked 33.5 hours and earned $702 per week, compared to the national average of 33.8 hours and $761 dollars per week—a wage gap of $59 per week, or over $3,000 per year.  By December 2011, four years after the onset of the recession, the earnings gap had grown even greater—North Carolina workers earned $729 per week, while their national counterparts earned $800 per week, a gap of $71 dollars per week, or almost $3,700 annually.

Prosperity Watch, Issue 11, No. 1: Deep poverty rate climbs in North Carolina over last decade, worse off than United States

In recent debates, policy makers have questioned the severity of poverty in North Carolina.  According to the U.S. Census Bureau, deep poverty is not only present in the state, but it has grown significantly since the onset of the Great Recession in 2007.   In fact, the deep poverty rate for 2010—defined as the share of the population with incomes below half the Federal poverty line—reached 7.8 percent in North Carolina. Half of the poverty line equates to an income of $11,157 for a family of four and $5,570 for an individual. Of the 728,842 North Carolinians who lived in deep poverty in 2010, 36% of them were children. One out of every ten children in the state lived in deep poverty in 2010.  

How does North Carolina compare nationwide? For 2010, the 7.8% deep poverty rate for North Carolina was a full percentage point above the record-high national rate of 6.8 percent, a figure which represents 20.4 million Americans living in deep poverty. Only 9 states experienced a higher deep poverty rate than North Carolina’s rate, and a majority of these states are located in the South.

Over the last decade (2001 to 2010), deep poverty in North Carolina rose 39.3 percent—3.3 percentage points faster than the 36 percentage increase experienced nationwide. Despite the nearly 6.5 million Americans falling into deep poverty during this period, the national deep poverty rate was still lower than North Carolina’s deep poverty rate for each year over the last decade. (See the chart below)

Unsurprisingly, the steepest year-to-year increase in deep poverty in North Carolina occurred during and after the Great Recession, when an additional 204,558 North Carolinians fell into deep poverty from 2007 to 2010 (which is only about 78,000 less than the change over the entire decade). Nationally, there were 20.4 million Americans living in deep poverty in 2010, up 4 million since 2007.

However, the Great Recession did not impact every state equally, and North Carolina is one of those states which suffered more than the national average. From 2007 to 2010, only Nevada and Florida experienced a higher percentage point increase in their deep poverty rate compared to North Carolina.