South By North Strategies, Ltd.

CHAPEL HILL (December 30, 2010) – North Carolina’s job market ended 2010 little changed from the start of the year. Between December 2009 and November 2010, the most recent month for which data are available, payroll employment in the state rose by just 1,400 positions. While the statewide unemployment rate fell over the year, much of the decline was due to a contraction in the size of the state’s labor force. And, little evidence suggests that a recovery will take hold in early 2011.

These findings come from an end-of-year review of the North Carolina job market released today by South by North Strategies, Ltd., a research firm specializing in economic and social policy. Available on Policy Points, the firm’s blog, the review summarizes the year’s major developments in the labor market.

“Although North Carolina gained some jobs during 2010, the growth was insufficient to reverse the serious damage inflicted during the recession,” says John Quinterno, a principal with South by North Strategies, Ltd. “Much of the growth came during the first half of the year thanks to various public policy supports. When those supports dropped away, the economy not only proved unable to generate jobs on its own, but it also gave back many of the gains realized earlier in the year.”

The review notes that the early 2011 should be another difficult period for the state’s labor market. Many of the policy supports that helped during 2010 have ended and little appears to have taken their place in sustaining economic demand. And the employment and spending reductions that will result from probable public budget cuts only will exacerbate the downward pressures.

The review is particularly worried about the ongoing contraction in the size of the state’s labor force and the problem of long-term unemployment.

“Much of the recent decline in North Carolina’s unemployment rate is due to a decrease in the size of the labor force,” notes Quinterno.”The labor force shrank by 1.6 percent over 2010 as frustrated workers abandoned their job searches. This is not a sign of a healthy or recovering job market.”

Long-term unemployment also remains a serious concern in Quinterno’s judgment. “If the worsening pattern of long-term unemployment is not reversed soon, many individuals will become effectively unemployable due to skills deterioration, stiff competition, and negative stereotyping on the part of employers,” warns Quinterno. “At that point, a serious cyclical employment problem will become an intractable structural one.”

The full review is available at http://www.sbnstrategies.com/?p=5300