South By North Strategies, Ltd.

For the benefit week ending on August 24, 2013, some 6,043 North Carolinians filed initial claims for state unemployment insurance benefits and 78,847 individuals applied for state-funded continuing benefits. Compared to the prior week, there were fewer initial claims and fewer continuing claims. These figures come from data released by the US Department of Labor.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 6,470 initial claims were filed over the previous four weeks, along with an average of 83,110 continuing claims. Compared to the previous four-week period, the average number of initial claims was lower, and the average number of continuing claims was lower.

One year ago, the four-week average for initial claims stood at 11,307, and the four-week average of continuing claims equaled 100,277.

In recent months covered employment has increased and now exceeds the level recorded a year ago (3.84 million versus 3.77 million). Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were more than 5.5 years ago.

The graph (right) shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007.

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably.  In fact, the four-week average of initial claims, when measured as a share of covered employment, is now at the lowest level recorded since early 2008. The four-week average of continuing claims also has fallen to the lowest level recorded since early 2008.

Note that the recent declines in new and continuing claims are not necessarily indicative of an improving labor marker. State legislation that took effect on July 1, 2013, made major changes to insurance eligibility criteria, and the more stringent criteria eliminate claims that would have been valid prior to July 1. In time, this development also should reduce the number of continuing claims. Additionally, the legislation reduced the maximum number of weeks  of state-funded insurance for which a claimant is eligible — an action that eventually should lead to a reduction in the number of continuing claims.   

To place the numbers in context, consider how the four-week average of initial claims (6,470) was 42.8 percent lower than the figure recorded one year ago (11,370), while the average number of continuing claims was  17.2 percent lower (83,110 versus 100,277). Given the relative lack of improvement in labor market condition in North Carolina over the past year, such declines likely are products of changes to unemployment insurance laws rather than improvements in underlying economic conditions.