South By North Strategies, Ltd.

CHAPEL HILL (January 22, 2010) – The December employment report released today by the Employment Security Commission contains few signs of a recovery in the job market. Since the start of the recession in December 2007, North Carolina has lost six percent of its payroll employment base and has seen its unemployment rate climb to a modern high of 11.2 percent.

Last month, North Carolina employers eliminated 2,400 more positions than they created; private-sector employers accounted for all of the losses. Although the state’s labor market has fluctuated between periods of slight payroll employment gains and losses over the past five months, overall employment conditions are bleak.

“The past two years have been atrocious ones for working North Carolinians,” says John Quinterno, a principal a South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Although jobs losses appear to have bottomed out in July, no real improvements have occurred since. The job market is stuck at the bottom of the recession.”

In December, North Carolina employers shed 2,400 more positions than they added. The public sector gained, on net, 800 positions, and the private sector cut, on net, 3,200 positions. Among private industries, leisure and hospitality services eliminated the most positions (-2,600), followed by manufacturing (-900), and trade, transportation and warehousing (-800). Professional services posted the largest numerical gain (+1,900), followed by government (+800), and information (+600). Furthermore, an upward revision to the November report reduced total net job losses for that month from 5,600 to 2,400.

“Although job market conditions appear to have stabilized, private-sector hiring remains scarce,” adds Quinterno. “In 2009, private employers cut 141,600 more positions than they added. More alarmingly, monthly net private-sector payroll growth has been positive just three times since the start of the recession. The private sector is not in a position to ignite or sustain a labor market rally.”

Despite the recent moderation in job losses, conditions have deteriorated markedly since last year. Compared to December 2008, the state had 124,200 fewer jobs (-3.1 percent). In terms of individual industries, manufacturing (-53,500) and construction (-33,700) lost the greatest number of positions over the past year, while construction also declined the most in relative terms (-15.1 percent). Government employment grew the most in absolute (+17,400 positions) and relative (+2.4 percent) terms.

“The job losses that have occurred during this recession are greater than those experienced during past ones,” notes Quinterno. “Severe job losses have pushed unemployment to the highest levels recorded since the mid-1970s.”

The extent of joblessness is reflected in December’s household data. Last month, the labor force contracted due to the decision of frustrated workers to abandon their job searches. Had those individuals remained in the labor force, the December unemployment rate would have been even higher than the official one. Over the past year, the number of unemployed North Carolinians grew by 36.7 percent and the unemployment rate rose to 11.2 percent from 8.1 percent. Additionally, over the year, the share of the working-age population participating in the labor market fell to 62.8 percent.

“North Carolina’s labor market is stuck in recessionary doldrums,” observes Quinterno. “A sizable share of the working-age population is jobless, yet little demand for labor appears to exist, especially in the private sector. Until that changes, conditions are unlikely to improve.”