South By North Strategies, Ltd.

CHAPEL HILL, NC (January 28, 2014) – Over the course of 2013, employers in North Carolina added 64,500 more payroll jobs than they cut (+1.6 percent), due entirely to hiring in the private sector. Yet both the absolute number of jobs added in 2013 and the rate of job growth recorded over the year were below the corresponding values logged in 2012 (+89,900 jobs, +2.3 percent). Put differently, 2013 saw little deviation from the pattern of anemic job growth that has troubled the state since the onset of the labor market recovery in early 2010.

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

“The December jobs report offered mixed news about job growth in North Carolina,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “On the one hand, job growth turned positive again in December, and as a result, the year’s final quarter proved to be its best one for job growth. On the other hand, North Carolina netted fewer jobs over the course of 2013 than it did in 2012.”

Between November and December of 2013, North Carolina businesses added 11,100 more jobs than they eliminated (+0.3 percent). Private-sector payrolls netted 10,600 positions (+0.3 percent), and public-sector payrolls netted 500 jobs (+0.1 percent). Within private industry, the trade, transportation, and utilities sector netted the most jobs (+4,500 jobs, or +0.6 percent, with 84.4 percent of the gain occurring in the retail trade subsector), followed by the other services (+2,100 jobs, or +1.5 percent) and finance sectors (+1,900 jobs, or +0.9 percent).

A revision to the November payroll data found that the state lost 1,600 fewer jobs that month than first estimated (-4,900 versus -6,500). With that revision, North Carolina now has, on net, 71,200 fewer payroll positions (-1.7 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 5,578 payroll jobs per month, resulting in a cumulative gain of 256,600 positions (+6.7 percent). At that rate, all else equal, it would take until early 2015 for the state to have as many jobs as it did at the end of 2007.

“Over the course of 2013, North Carolina netted jobs, on average, at a rate of 0.1 percent per month,” noted Quinterno. “In 2012, the state gained jobs, on average, at a rate of 0.2 percent per month, and in both 2010 and 2011, the comparable average rate of growth was 0.1 percent per month. While positive growth always is welcome, the state’s labor market has experienced the same basic pattern of slow job growth for the past four years.”

At first glance, the household data recorded in December offered a positive view of the state’s labor market. Last month, the statewide unemployment rate fell by 0.5 percentage points to 6.9 percent, which was the lowest monthly rate recorded since September 2008, when the rate also was 6.9 percent. Additionally, 19,217 more North Carolinians had jobs in December (+0.4 percent) than was the case in November, and 21,097 fewer persons were unemployed (-6.1 percent). And over the month, the size of the state’s labor force essentially held steady at 4.7 million.

While the household data for the month of December generally were positive, the data for the year as a whole were not. The state’s unemployment rate fell by 2.5 percentage points over the course of 2013, but most of the decline originated in a contraction in the size of the state’s labor force. Between December 2012 and December 2013, the number of employed North Carolinians rose by just 13,414 persons (+0.3 percent), yet the number of unemployed North Carolinians fell by 124,344 persons (-27.8 percent). The remaining 110,930 individuals left the labor force entirely, meaning that North Carolina ended 2013 with a labor force that was 2.3 percent smaller than was the case a year earlier. In fact, North Carolina’s labor force now is approximately as large as it was in the middle of 2011.

Declines in the statewide labor force participation rate provide additional evidence of a labor market that underperformed in 2013. In December, the labor force participation rate fell to 61.2 percent, which was the lowest monthly figure recorded at any point since 1976. In fact, the labor force participation rate fell steadily during 2013. Over the year, that important measure of labor utilization fell by 2.1 percentage points, dropping to 61.2 percent from 63.3 percent.

Although another important measure of labor utilization, the employment-to-population ratio, increased between November and December, the current ratio of 57 percent is 0.4 percentage points lower than the corresponding figure logged in December 2012 and just 0.7 percentage points above the 37-year low of 56.3 percent posted in the summer of 2011.

December’s labor market report provided additional insight into the effects of the extensive changes to the state’s system of unemployment insurance implemented over the summer. Between November and December, the number of claimants of regular state-funded insurance increased by 4.2 percent, rising to 60,889 from 58,432. Compared to a year earlier, however, 49,942 fewer individuals received regular state-funded insurance in December (-45.1 percent).

Also in December, the state paid a (nominal) total of $59.1 million in regular state-funded unemployment insurance compensation, an amount 48.8 percent lower than the (nominal) total of $115.5 million paid in December 2012.

“The sizable drop in the state’s unemployment rate in December does not alter the fact that 2013 was yet another underwhelming year for North Carolina’s labor market,” observed Quinterno. “Job growth lagged behind the pace recorded in 2012 and was consistent with the uninspiring performance of the past four years. While the unemployment rate did fall sharply over the course of 2013, the number of employed persons barely changed, meaning that unemployment fell due to people leaving the labor market altogether rather than finding work.”

“None of 2013 data suggest that North Carolina’s labor market has turned a corner and has moved onto a more robust, more sustainable trajectory.”