South By North Strategies, Ltd.

CHAPEL HILL (November 19, 2009) – October’s employment report from the Employment Security Commission offers more evidence that a jobless recovery is taking shape in North Carolina.

Last month, North Carolina employers added 12,100 more positions than they eliminated. This was the second time in three months in which the state netted some jobs. Nevertheless, the job market is not generating enough positions to absorb new workers or those displaced over the past year.

“Since reaching a low point in July, North Carolina’s job market has posted some gains,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “October marks the first time in 15 months in which private payrolls grew slightly. While conditions may have stabilized, they are not necessarily improving.”

In October, North Carolina employers added 12,100 more positions than they shed. The public sector added 5,800 positions while the private sector netted 6,300 positions. Among private-sector industries, education and health services posted the largest gain (+5,800) while construction shed the most positions (-6,600). Additionally, a downward revision to the September employment report resulted in the net loss of another 2,500 positions.

“North Carolina’s job market is going nowhere fast,” adds Quinterno. “Even with some positive October data, private-sector hiring remains anemic. In fact, most hiring in the state is being driven by the public sector, either through direct hiring or through the financing of health care services. If not for government spending, employment conditions would be much worse.”

Despite the recent moderation in job losses, conditions have deteriorated markedly since October 2008, which is when North Carolina’s job market began its slide.

Compared to one year ago, the state has 188,100 fewer jobs (-4.6 percent) and 203,000 fewer private-sector ones (-6 percent). In terms of individual industries, manufacturing (-67,600) and construction (-42,200) lost the greatest number of positions over the past year, while construction declined the most in relative terms (-18 percent). Government employment has grown the most in both absolute (+14,400 positions) and relative (+2 percent) terms.

“The past year has been a horrible one for North Carolinians who depend upon paid employment to earn a living,” notes Quinterno. “Severe job losses have pushed unemployment to the highest levels posted since 1976, which is when modern records began being kept.”

The extent of joblessness is reflected in the household data for October. Last month, the labor force contracted by 1,106 individuals as discouraged workers abandoned job searches. Furthermore, the October unemployment rate of 11 percent tied June 2009 for the second-highest monthly state unemployment rate seen since 1976. And compared to a year ago, fewer Tar Heels are in the labor force or employed, and 1.5 times as many are unemployed.

“Right now, there is a tremendous amount of idle labor in North Carolina, both in terms of unemployed individuals and those who are effectively jobless but are not included in the official statistics,” continues Quinterno. “Even though labor market conditions have improved slightly over the past three months, the level of growth is insufficient to make much of a dent in the current situation.”

“Consumer demand is weak, economic conditions are uncertain, and employers have many alternatives to adding full-time positions,” says Quinterno. “Absent increased demand, North Carolina’s labor market will limp along well into the future.”