South By North Strategies, Ltd.

CHAPEL HILL, NC (January 27, 2015) – In December, employers in North Carolina added 15,100 more payroll jobs than they cut (+0.4 percent), due entirely to hiring in the private sector. With that gain, the state ended 2014 with 114,500 more payroll jobs than it had at the beginning of the year (+2.8 percent). Yet compared to December 2007, North Carolina ended 2014 with just 50,700 more payroll jobs (+1.2 percent) than it had seven years ago.

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

“Judged by recent standards, 2014 proved to be a relatively decent year for 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. “The state’s 2.8 percent rate of job growth somewhat exceeded the national growth rate of 2.1 percent and was better than the state-level rates recorded in any year since the onset of North Carolina’s recovery in 2010.”

During 2014, North Carolina employers added 114,500 more jobs than they cut (+2.8 percent). Private-sector payrolls netted 119,900 positions (+3.5 percent), while public-sector payrolls shed, on net, 5,400 jobs (-0.8 percent), owing entirely to net reductions by state government (-7,900, -3.8 percent). Within private industry, the professional and business services sector netted the most jobs (+40,200, +7.1 percent), with 50.2 percent of that gain originating in the administrative and waste management subsector. The trade, transportation, and utilities sector netted 17,600 payroll jobs (+2.3 percent, with 57.4 percent of the gain originating in the retail trade subsector), followed by the construction (+12,500, +7.2 percent) and leisure and hospitality services (+11,800, +2.7 percent) sectors.

Overall, no major private industrial sector experienced a net decline in payroll size in 2014.

A revision to the November 2014 payroll data found that the state gained 700 more jobs that month than first estimated (+17,100 versus +16,400). With the revision, North Carolina now has, on net, slightly more payroll jobs (+50,700, +1.2 percent) than it did in December 2007, which is when the “Great Recession” began nationally. Since bottoming out in February 2010, the state has netted an average of 6,543 payroll jobs per month, resulting in a cumulative gain of 379,500 positions (+9.9 percent).

“The fact that North Carolina now has slightly more payroll jobs than it did seven years ago does not mean that the state’s labor market has recovered,” cautioned Quinterno. “Over the past seven years, North Carolina has needed not only to replace the jobs lost during the recession, but also to add jobs to keep pace with the growth of the working-age population. Depending on the assumptions used, North Carolina is anywhere from 200,000 to 400,000 payroll jobs short of the number it should have added since late 2007 to accommodate population growth.”

During 2014, the statewide unemployment rate as measured in the monthly household survey dropped sharply, falling to 5.5 percent from 6.9 percent. Additionally, the December unemployment rate was the lowest one logged in any month since mid-2008. Over the course of 2014, the number of employed North Carolinians rose (+25,339, + 0.6 percent), while the number of unemployed persons fell sharply (-67,584, -20.9 percent). Much of the decline in the unemployment rate therefore was attributable mathematically to a contraction in the size of the labor force (-42,245, -0.9 percent). In fact, the size of North Carolina’s labor force in December was smaller than it has been in any month since January 2010.

Over the course of 2014, some 62.5 percent of the decline in the number of unemployed North Carolinians was attributable to people who left the labor force entirely rather than to those who became employed. If those 42,245 leavers from the labor force were added back and considered unemployed, the statewide unemployment rate in December would have equaled 6.4 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 percent.

Year-over-year declines in the statewide labor force participation rate provide additional evidence of a labor market with problematic underlying dynamics. In December, the share of working-age North Carolinians participating in the labor market was 59.8 percent, which was lower than the 61.1 percent figure logged a year ago, not to mention the lowest monthly rate recorded at any time since January 1976.

In addition, another important measure of labor utilization, the employment-to-population ratio, fell over the year, dropping to 56.5 percent from 56.8 percent. The current share of working-age North Carolinians with a job now is just slightly above the lowest rate logged at any point since 1976 (56.3 percent).

The December labor market report provides additional insight into the effects of the extensive changes to the state’s system of unemployment insurance implemented in July 2013. Over the year, the number of claimants of regular state-funded insurance fell by 47.8 percent, dropping to 31,806 from 60,889.  Also in December, the state paid a (nominal) total of $27.6 million in regular state-funded unemployment insurance compensation, an amount 53.3 percent lower than the (nominal) total of $59.1 million paid in December 2013.

“North Carolina netted jobs in 2014 at a rate faster than those posted in recent years, but even with those gains, the state’s labor market is still not recovered,” added Quinterno. “Compared to seven years ago, North Carolina has just 1.2 percent more payroll jobs, and it has 11.7 percent more unemployed residents and an unemployment rate that is 0.5 percentage points higher. And a smaller share of the working-age population is participating in the labor force than at any point in almost 40 years.”