South By North Strategies, Ltd.

CHAPEL HILL (April 7, 2010) –  Labor market conditions across North Carolina have changed little in 2010, according to preliminary data released today by the Employment Security Commission. In February, 87 counties posted double-digit unemployment rates, and 58 counties recorded unemployment rates of at least 12 percent. Local labor forces also contracted in 40 counties.

“North Carolina’s local labor markets have performed sluggishly in 2010,” says John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy. “While job losses have abated, positions are not being generated at levels needed to absorb unemployed North Carolinians or re-absorb individuals returning to the job market.”

Since the recession’s onset in December 2007, North Carolina has shed 6.8 percent of its payroll employment base (-282,500 positions) and has seen its unadjusted unemployment rate climb from 4.7 percent to 11.8 percent.

Every part of the state experienced weak labor markets in February. Unemployment rates exceeded 10 percent in 87 counties, and in 58 counties, at least 12 percent of the labor force was jobless and actively seeking work. County unemployment rates ranged from 6.9 percent in Orange County to 19.4 percent in Graham County.

“While the recession has battered communities across the state, non-metropolitan areas have been quite hard hit,” adds Quinterno. “Last month,13.1 percent of the non-metro labor force was unemployed, compared to 11.3 percent of the metro labor force. The number of unemployed individuals in non-metro areas has more than doubled since December 2007.”

Unemployment also rose last month in 6 of the state’s metropolitan areas. Nine metros posted double-digit unemployment rates. The Hickory-Morganton-Lenoir area had the highest unemployment rate (15.8 percent) followed by Rocky Mount (14.7 percent). The lowest metro unemployment rate was 8.4 percent in Durham-Chapel Hill.

“Because of the lack of seasonal adjustments, monthly fluctuations in local unemployment rates must be interpreted cautiously, especially since a number of unique factors were at work in February,” warns Quinterno. “A better comparison is to contrast yearly data.”

Compared to February 2009, unemployment rates were the same or higher in 80 counties and 13 metro areas. And compared to a year ago, 72 counties and 8 metro areas had smaller labor forces. Among metros, Hickory-Morganton-Lenoir posted the largest decline in the size of its labor force (-3.9 percent), followed by Burlington (-1.7 percent). Jacksonville posted the largest gain (+5.4 percent).

“Some analysts may say that the economy has turned a corner based on some recent positive macroeconomic numbers, but local job markets are showing little evidence of improvement,” cautions Quinterno. “On the contrary, the report suggests that more difficulties are in store for 2010, especially as federal recovery spending fades away.”

In the long-term, any meaningful labor market recovery in North Carolina will be fueled by growth in the state’s three major metro regions: Charlotte, the Research Triangle, and Piedmont Triad. Yet little growth has been evident in these communities so far in 2010. Collectively, employment in the state’s three major metro regions has fallen by 6.2 percent since the start of the recession. The overall February unemployment rate in the major metros equaled 11.1 percent. Of the three areas, the Research Triangle had the lowest February unemployment rate (9.4 percent), followed by the Piedmont Triad (12.3 percent) and Charlotte (13.4 percent).

“One piece of good news contained in the February report is evidence of the powerful role that unemployment insurance has played in blunting the recession,” observes Quinterno. “Over the last 12 months, the Employment Security Commission paid out $5.2 billion in regular state payments, emergency federal benefits, and additional federal compensation. These payments not only helped households coping with a job loss, but they also generated an estimated $8.6 billion in statewide economic activity. Unfortunately, Congress has allowed the various federal emergency programs to expire, and this will cause difficulties going forward.”