Prosperity Watch Issue 42, No. 2: Employment Levels Remain Depressed in North Carolina

The proportion of North Carolinians who are employed—known as the employment-to-population ratio—remains below pre-recession levels and at a level not seen since before 1979. While the state’s unemployment rate has fallen over the last year this low level of employment relative to the working-age population signals an economy that is failing to deliver jobs to all who want to work.  

The employment-to-population level represents an important complementary measure to the unemployment rate in assessing the state of North Carolina’s labor market.  It is not impacted by changes in the size of the labor market because it reflects the number of employed persons as a share of the population. As is clear in the current recovery, the rapid decline in the unemployment rate has not delivered a commensurate improvement in the employment level and this is largely due to the lack of jobs, not demographic trends.  Nationally, the employment-to-population ratio has only recovered a third of the way to its pre-recession peak.

North Carolina’s employment-to-population ratio for the prime working age population, those 25 to 54 years of age, fell by 1.5 percent from 2008 to 76.5 percent in 2013.  By looking just at this age group, it is less likely that the figures are impacted by young people deciding to go to school or older people retiring. North Carolina’s pre-recession peak in employment-to-population for this group reached 80.2 percent in 2006 and has only recovered 35 percent.

North Carolina’s trajectory in the recovery has followed that of the Southern? Regions. This not only provides further evidence that policy choices in North Carolina have not generated unique economic performance but demonstrates the shared economic experience of the region.  The South overall saw its employment-to-population ratio fall from 2008 by 3.2 percent. 

It is clear that significant job creation is needed to get back to pre-recession levels of employment for the prime working age population of the state.

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