Unemployment rate masks 250,000 "missing workers"
Published April 5, 2014
by NC Budget and Tax Center, April 3, 2014.
North Carolina’s official unemployment rate only tells half of the story, according to a new report released today that finds a quarter-million working age North Carolinians are neither employed nor seeking work due to a bleak job market.
These “missing workers” are not reflected in the unemployment rate, and their ranks have grown 65 percent over the last year—equaling 250,000 workers—according to a report from the Budget & Tax Center, a project of the NC Justice Center. The state’s unemployment rate of 6.4 percent would be nearly double (11.9 percent) if these “missing workers” were counted.
This is proof that the state is failing to generate enough jobs, the report said, despite an official drop in unemployment.
“The growth in the number of missing workers is stifling the state’s economic potential, as well as adding to the everyday struggles of tens of thousands of families who are finding it increasingly difficult to make ends meet,” said Alexandra Sirota, director of the Budget & Tax Center and author of the report. “It is critical that our policymakers invest in education, job training, and direct job creation strategies like subsidized employment as well as focus on policies that strengthen the connection to the workforce for the state’s men and women who are seeking work in a weak labor market.”
A new measure of the missing workers, developed by the Economic Policy Institute and adapted for North Carolina, estimates the number of North Carolinians who would have been working or seeking work if the Great Recession hadn’t taken place and job opportunities remained strong.
Contrary to claims by Governor McCrory’s office and the media, the drop in the labor force and the growth in the missing workers is not being driven by demographic or long-run trends. A significant and rigorous body of research has demonstrated that the labor force decline is almost entirely driven by a weak labor market. This research is further supported by February’s jobs numbers which showed, once again, that just 4 out of 10 unemployed workers moved into employment over the past year, while the rest left the labor force.
Without steady growth in the labor force the state’s economy and growth will suffer, the report said. When jobless workers get discouraged about finding work and leave the labor force, it indicates that the economy is in worse shape than the unemployment rate would suggest, and is a bad portent for the economy overall. Workers who are unemployed for long stretches see their skills erode, find it difficult getting hired for new work due to gaps in their employment history, and suffer both financial and health changes. It can also impact their children, who may fall into poverty.
“Generating too few jobs for those who want to work remains the primary challenge in North Carolina’s economic recovery,” Sirota said. “State policymakers have so far failed to address the problem and pursued policies like tax cuts for the wealthy and profitable corporations that will not deliver much-needed jobs for North Carolina.”
