South By North Strategies, Ltd.

CHAPEL HILL (September 24, 2010) – Local labor market conditions remained weak across much of North Carolina in August, according to preliminary data released today by the Employment Security Commission. Last month, 50 counties posted double-digit unemployment rates, while 17 counties recorded rates of at least 12 percent.

“The basic local employment picture was unchanged in August,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Although conditions in some communities improved somewhat, joblessness and the accompanying problems remained widespread.”

Since the onset of the recession in December 2007, North Carolina has shed 6.2 percent of its payroll employment base (-259,500 positions) and has watched its unadjusted unemployment rate climb from 4.7 percent to 9.8 percent. Although the state gained 18,600 more positions than it lost in August, almost all of those gains were due to an expected rise in public education employment. After accounting for that development, the state netted just 4,800 positions.

Every part of the state experienced weak labor markets in August. Unemployment rates exceeded 10 percent in 50 counties, and in 17 counties, at least 12 percent of the labor force was jobless and actively seeking work. County unemployment rates ranged from 4.1 percent in Currituck County to 15.7 percent in Scotland County.

“Labor markets in non-metropolitan communities remain quite weak,” adds Quinterno. “Last month, 10.6 percent of the non-metro labor force was unemployed, compared to 9.4 percent of the metro one. More alarmingly, the non-metropolitan labor force continued to shrink. Between August 2009 and August 2010, the non-metropolitan labor force contracted by 2.5 percent. Many of those missing individuals are effectively jobless.”

Last month, unemployment rates fell in all 14 of the state’s metropolitan areas. Rocky Mount had the highest unemployment rate (12.7 percent), followed by the Hickory-Morganton-Lenoir area (12.6 percent). Durham-Chapel Hill had the lowest rate at 7.3 percent.

“Because of the lack of seasonal adjustments, monthly fluctuations in local unemployment rates must be interpreted cautiously, particularly during the volatile summer months,” warns Quinterno. “A better comparison is an annual one.”

Compared to August 2009, unemployment rates were lower in 90 counties and every metro area. Yet compared to a year ago, 71 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 (-3.6 percent), followed by Rocky Mount (-2.5 percent). Jacksonville posted the largest gain (+6.8 percent).

“Recent drops in unemployment rates have been driven not by improvements in underlying conditions, but by workers abandoning the job market,” cautions Quinterno. “The robust job growth needed to absorb displaced individuals and new workers is not happening.”

In the long term, any meaningful recovery will be driven by growth in the state’s three major metro regions: Charlotte, the Research Triangle, and the Piedmont Triad. Yet job growth in 2010 has been sluggish. Collectively, employment in these three major metro regions has fallen by 4.2 percent since the start of the recession. The overall August unemployment rate in the major metros equaled 9.4 percent. Of the three areas, the Research Triangle had the lowest unemployment rate (8 percent), followed by the Piedmont Triad (10.2 percent) and Charlotte (11.4 percent).

“The August jobs report illustrates just how weak local economies really are,” observes Quinterno. “Private-sector employers are not creating positions in any meaningful way, so many North Carolinians who are ready, willing, and able to work are finding themselves blocked out of the labor market. The basic pattern has not changed much since early 2009.”

One somewhat bright spot in the August report was the boost that unemployment insurance benefits provided to individual households and the state’s economy. Explains Quinterno: “Over the past 12 months, unemployed North Carolinians received $5.5 billion in regular state payments and federal emergency benefits. Those payments sparked an estimated $9 billion in statewide economic activity.”