MEDIA RELEASE: Slight drop in state unemployment masks dangerous trends

Slight drop in state unemployment masks dangerous trends
New data shows an immediate need for more job creation efforts, says analyst

RALEIGH (Aug. 20) – Though North Carolina’s joblessness rate saw a small drop this morning, the underlying labor market data points to serious economic dangers.

“The decline in the unemployment rate is masking the reality in the labor market,” said Alexandra Forter Sirota, a policy analyst with the NC Justice Center's Budget & Tax Center. “The number of people missing from the labor market is at an all time high and the state continues to lose jobs.”

North Carolina's unemployment rate sank to 9.8 percent in July from a 10 percent rate in June – but the state’s labor force has declined at about five times the national average since the recession began. This is why the unemployment rate can dip slightly despite the state shedding almost 30,000 jobs.

“Without greater focus on preserving and creating jobs and encouraging more North Carolinians to re-enter the labor market, it is very likely that the unemployment rate will eventually increase,” said Sirota.

North Carolina's job shortfall — the number of jobs needed to keep pace with the growth in the working age population and replace jobs lost — grew this month to reach more than 425,000 jobs. 

Job preservation and creation must be the primary goal of our state and federal policymakers if North Carolina is to achieve a full economic recovery,” said Sirota.

Extending funding for the Temporary Assistance to Needy Families Emergency Fund which provides for investment in local jobs -- the majority of which are in the private sector -- is one important opportunity to create jobs that will be considered this fall by Congress, Sirota said.

One bright spot comes from already-passed federal fiscal relief. The total number of jobs in North Carolina declined by 29,800 since June, driven primarily by losses in government, where 27,300 jobs were lost. Many of these are local school district jobs. 

There is therefore the potential for the recently passed education funding at the federal level, totaling $300 million for North Carolina, to go some way to improving the jobs outlook for these hundreds of educators who lost their job in July.

Some other troubling trends in the data:

More Job Losses In Professional, Business Sectors

While construction continues to lose jobs (2,800) a sign of the still troubled housing market, the job losses are more acutely felt in the professional and business sectors -- 1700 jobs have been lost in leisure and hospitality services, 1,300 jobs lost in professional and business activities and 1,100 in general services) now as compared to the early and significant declines in manufacturing.

A significant 18.6 percent of jobs in manufacturing and a whopping 32 percent of jobs in construction have been lost since the start of the recession.

Decline in Average Hours Worked

Another trend of note is the decline in average hours worked this month.  After a modest increase in previous months, the hours worked in manufacturing declined by 12 minutes.

Since the start of the recession, workers in manufacturing have lost more than an hour of work which multiplied over the course of the year represents the loss of nearly two weeks of work. Fewer hours means fewer dollars earned and spent in local economies.

More Unemployment Insurance Benefits Claimed

Initial claims for unemployment increased by 4,073 from June and the majority of those claims were not attached to payroll meaning that the workers did not expect to be recalled to their jobs.

It is important to keep unemployment insurance funds circulating through North Carolina’s economy. In July, $138 million in regular UI benefits were paid, allowing unemployed workers to maintain their level of spending and meet the minimum of their family obligations. 

Decline in Labor Force

The decline in North Carolina’s labor force since the start of the recession has been significant, decreasing by almost 1 percent compared to the national decline of 0.2 percent. From June to July, the labor force declined by 35,612 North Carolinians. But based on available numbers from June 2010, it is likely that far more are missing from the labor force.

FOR MORE INFORMATION, CONTACT: Alexandra Forter Sirota, 919.861.1468, alexandra@ncjustice.org; Jeff Shaw, director of communications, 503.551.3615, jeff@ncjustice.org.

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