NC payrolls grow in October

Published November 25, 2014

by John Quinterno, South by North Strategies, November 21, 2014.

In October, employers in North Carolina added 17,200 more payroll jobs than they cut (+0.4 percent), due mainly to hiring in the private sector. The monthly household survey, meanwhile, logged a drop in the unemployment rate to 6.3 percent. With last month’s net job growth, North Carolina now has slightly more jobs than it did in December 2007, yet the state also has 28.4 percent more unemployed residents than it did almost seven years ago, as well as an unemployment rate that is 1.3 percentage points higher.

These findings come from new data released today by the Labor and Economic Analysis Division of the NC Department of Commerce.

“The October employment report was consistent with the pattern of modest jobs growth that has characterized North Carolina’s slow recovery from the last recession,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “North Carolina netted jobs in October and now has slightly more jobs than it did in December 2007, but that is not the same thing as a full labor market recovery.”

Between September 2014 and October 2014, North Carolina employers added 17,200 more jobs than they cut (+0.4 percent). Private-sector payrolls netted 13,700 positions (+0.4 percent), and public-sector payrolls netted 3,500 jobs (+0.5 percent), owing primarily to hiring by local governments (+7,500, +1.7 percent). Within private industry, the education and health services sector netted the most jobs (+6,100, +1.1 percent), with all of the hiring originating in the health care and social services subsector. The leisure and hospitality sector netted 3,500 jobs (+0.8 percent, with 77.1 percent of the gain originating in the accommodation and food service subsector), followed by the other services sector (+2,300, +1.5 percent). Meanwhile, the finance sector shed the most jobs (-2,000 jobs, -0.9 percent). All other major industrial sectors experienced modest changes in payroll sizes.

A revision to the September 2014 payroll data found that the state gained 3,300 fewer jobs that month than first estimated (+10,700 versus +14,000). With the revision, North Carolina now has, on net, slightly more payroll jobs (+15,900, +0.4 percent) than it did in December 2007, which is when the “Great Recession” began nationally. Since bottoming out in February 2010, the state has netted an average of 6,155 payroll jobs per month, resulting in a cumulative gain of 344,700 positions (+9 percent).

Note that the return of North Carolina’s payroll size to the pre-recession level does not mean that the state’s labor market has recovered. Over the past 6.75 years, North Carolina has needed not only to replace the jobs lost during the recession, but also to add jobs to keep pace with the growth of the working-age population. By one estimate, North Carolina still is 441,000 payroll jobs short of the number it should have added since late 2007 to accommodate the 11 percent rate of population growth that has occurred since then. At the current pace of net job growth, it would take another 72 months to fill that gap, holding all else equal.

“Although North Carolina has experienced job growth in 2014, the pace of growth has been modest,” noted Quinterno. “Over the first 10 months of the year, payroll employment in North Carolina expanded by 1.9 percent. The comparable rate in 2013 was 2 percent, and in 2012, the comparable rate was 1.6 percent. These rates are consistent with a sluggish recovery.”

In contrast to the payroll data, the household data recorded October pointed to a labor market that has yet to recover the ground lost during the recession. Last month, the statewide unemployment rate dipped to 6.3 percent from 6.7 percent, while the number of unemployed individuals fell by 16,685 (-5.4 percent). At the same time, the number of employed North Carolinians rose (+17,508, +0.4 percent). And the size of the labor force essentially held steady at 4.6 million persons.

Over the year, the statewide unemployment rate fell by 1.2 percentage points, dropping to 6.7 percent from 7.5 percent, with the number of unemployed North Carolinians decreasing by 54,551 persons (-15.7 percent). However, 47.8 percent of the decline was attributable to people who left the labor force entirely rather than to those who became employed. If those 26,104 leavers from the labor force were added back and considered unemployed, the statewide unemployment rate in October would have equaled 6.8 percent. Even if 50 percent of those individuals were added back to the labor force and considered unemployed, the statewide unemployment rate would have equaled 6.6 percent.

Year-over-year declines in the statewide labor force participation rate provide additional evidence of a labor market with problematic underlying dynamics. In October, the share of working-age North Carolinians participating in the labor market was 60.3 percent, which was lower than the 61.3 percent figure logged a year ago and was tied for the lowest monthly rate recorded at any time since January 1976.

In addition, another important measure of labor utilization, the employment-to-population ratio, fell over the year, dropping to 56.5 percent from 56.8 percent. The current share of working-age North Carolinians with a job is just slightly above the lowest rate logged at any point since 1976.

The October labor market report provides additional insight into the effects of the extensive changes to the state’s system of unemployment insurance implemented in July 2013. Between September and October, the number of claimants of regular state-funded insurance fell by 10.3 percent, dropping to 33,283 from 37,107. Compared to a year earlier, 27,842 fewer individuals received regular state-funded insurance in October (-45.5 percent).

Also in October, the state paid a (nominal) total of $27.9 million in regular state-funded unemployment insurance compensation, an amount 53.7 percent lower than the (nominal) total of $60.2 million paid in October 2013.

“North Carolina netted jobs in October, but even with those gains, the state simply is not adding jobs at a rapid enough pace to keep pace with the growth in the working-age population, and that is why joblessness remains a problem across much of the state,” added Quinterno. “While the state now has the same number of jobs as it did when the last recession started, that development does not signal a full labor market recovery. On the contrary, weak job growth and joblessness remain significant problems.”

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