South By North Strategies, Ltd.

CHAPEL HILL, NC (July 18, 2014) – In June, employers in North Carolina shed 5,800 more payroll positions than they added (-0.1 percent), due almost entirely to reductions in the payrolls of local governments. The monthly household survey, meanwhile, recorded no change in the unemployment rate (6.4 percent), even though the number of employed persons fell over the month. With those developments, North Carolina has 1.2 percent fewer payroll jobs, 30.9 more unemployed residents, and a higher unemployment rate (+1.4 percentage points) than it did 6.5 years ago.

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

“The June employment report is indicative of a state labor market experiencing a painfully slow recovery,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Last month, North Carolina lost more jobs than it gained, and the state experienced declines in both the size of the labor force and the number of employed residents. While conditions in the state are better in some ways than they were a year ago, they still have not returned to their pre-recessionary levels.”

Between May 2014 and June 2014, North Carolina employers cut 5,800 more jobs than they added (-0.1 percent). Private-sector payrolls netted 7,500 positions (+0.2 percent), but public-sector payrolls shed, on net, 13,300 jobs (-1.9 percent), owing primarily to reductions by local governments. Within private industry, the professional and business services sector netted the most jobs (+3,700, with almost of the gains occurring in administrative and waste management subsector), followed by the financial activities sector (+3,400, +1.6 percent) and the trade, transportation, warehousing, and utilities sector (+1,000, with almost all the gain originating in the retail trade subsector). Meanwhile, the information sector shed 500 more jobs than it added (-0.7 percent). All other major industrial sectors experienced little change in payroll size.

A revision to the May 2014 payroll data found that the state gained 3,000 more jobs that month than first estimated (+8,700 versus +5,700). With the revision, North Carolina has, on net, 48,500 fewer payroll positions (-1.2 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 5,400 payroll jobs per month, resulting in a cumulative gain of 280,300 positions (+7.3 percent). At that rate, holding 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.

“While positive, the pace of payroll growth in North Carolina has not changed radically over the past year,” noted Quinterno. “Between June 2013 and June 2014, the total number of payroll jobs in North Carolina grew by 1.8 percent, a rate similar to that seen in prior years. Between June 2012 and June 2013, the total of number payroll jobs in North Carolina rose by 1.7 percent, while between June 2011 and June 2012, the rate of growth was 1.5 percent. In effect, North Carolina has logged the same slow rate of job growth for several years in a row.”

The household data recorded in June contained negative news about the state’s labor market. Last month, the statewide unemployment rate held steady at 6.4 percent, even though the number of employed persons fell by 8,577 (-0.2 percent). However, a decline in the size of the statewide labor force (-10,719 persons, -0.2 percent) blunted the impact of the drop in employment. Remember, however, that the monthly changes in the June data should be interpreted cautiously due to the seasonal dynamics often present at the start of summer.

While the changes in household data recorded between May and June appeared negative, the data for changes over the past year were more mixed. Between June 2013 and June 2014, the number of unemployed North Carolinians fell by 89,007 persons (-22.9 percent), but 13.4 percent of the decline was attributable to people who left the labor force entirely. If those 11,953 persons were added back to the labor force and considered unemployed, the statewide unemployment rate in June would have equaled 6.6 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 6.5 percent.

Year-over-year declines in the statewide labor force participation rate provide additional evidence of an underperforming labor market. In June 2014, the share of working-age North Carolinians participating in the labor market equaled 61.1 percent, which was lower than the 62 percent figure recorded a year ago. The June labor force participation rate was only slightly above the lowest monthly figure (61 percent) recorded at any time since January 1976.

In contrast, another important measure of labor utilization, the employment-to-population ratio, rose over the year, climbing to 57.2 percent from 56.8 percent. Nevertheless, the current share of working-age North Carolinians with a job is just 0.9 percentage points above the 38-year low of 56.3 percent posted in 2011.

The June labor market report provided additional insight into the effects of the extensive changes to the state’s system of unemployment insurance implemented last summer. Between May and June, the number of claimants of regular state-funded insurance fell by 4.8 percent, dropping to 40,347 from 42,382. Compared to a year earlier, 50,631 fewer individuals received regular state-funded insurance in June (-55.7 percent).

Also in June, the state paid a (nominal) total of $36.8 million in regular state-funded unemployment insurance compensation, an amount 60.9 percent lower than the (nominal) total of $94.2 million paid in June 2013.

“Despite some improvements in North Carolina’s labor market over the year, most of the improvements have been marginal ones,” added Quinterno. A consideration of indicators other than the important-yet-limited unemployment rate reveals a labor market that is adding jobs too slowly to overcome the consequences of the last recession anytime soon.”