South By North Strategies, Ltd.

Local Employment Conditions Improved Over The Year

CHAPEL HILL, NC (November 2, 2012) – Between September 2011 and September 2012, unemployment rates fell in every one of North Carolina’s 100 countries and in all 14 of the state’s metropolitan areas. Over the same period, labor force sizes grew in 58 counties and in 11 metro areas. These findings come from new estimates prepared by the Labor and Economic Analysis Division of the North Carolina Department of Commerce.

“Local unemployment rates fell across North Carolina over the year,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Local labor market conditions nevertheless remained far from healthy in September, with 38 counties and two metros posting unemployment rates of at least 10 percent.”

Compared to December 2007, which is when the economy fell into recession, North Carolina has 5.4 percent fewer jobs (-223,700) and has seen its unadjusted unemployment rate climb from 4.7 percent to 8.9 percent. In September, the state gained 100 more payroll jobs than it lost (+/- 0.0 percent). Since bottoming out in February 2010, the state’s labor market has netted an average of 3,310 jobs per month, resulting in a cumulative gain of 102,600 positions (+2.7 percent).

Between August 2012 and September 2012, the local unemployment rate fell in 97 counties, rose in one county, and was unchanged in two counties. Individual county rates ranged from 5.1 percent in Currituck County to 16.1 percent in Scotland County. Overall, 38 counties posted unemployment rates greater than or equal to 10 percent, and 62 counties posted rates between 5 and 10 percent.

“Non-metropolitan labor markets continue to struggle relative to metropolitan ones,” noted Quinterno. “In September, 9.9 percent of the non-metro labor force was unemployed, compared to 8.5 percent of the metro labor force. Compared to December 2007, the non-metro labor force is now 0.1 percent smaller in size, and 4.7 percent fewer non-metro residents are employed. Meanwhile, the number of unemployed rural persons has grown by 79 percent and totals 132,912. On a positive note, the size of the non-metro labor force essentially held steady over the year, while the number of employed persons rose, and the number of unemployed persons declined.”

Over the month, unemployment rates fell in all 14 metro areas. Rocky Mount had the highest unemployment rate (12 percent), followed by Hickory-Morganton-Lenoir (10.3 percent). Durham-Chapel Hill had the lowest unemployment rate (6.9 percent), followed by Asheville (7.1 percent) and Raleigh-Cary (7.2 percent).

Compared to September 2011, unemployment rates were lower in September 2012 in all 100 counties and in all 14 metros. Over the year, labor force sizes contracted or held steady in 42 counties and in three metros. Among metros, Wilmington’s labor force contracted at the fastest rate (-2.2 percent), followed by Winston-Salem (-0.7 percent). With those changes, metro areas now are home to 71.6 percent of the state’s labor force, with 50.2 percent of the labor force residing in the Triangle, Triad, and Charlotte metros.

In the long term, any meaningful recovery will hinge on economic and employment growth in the Charlotte, Research Triangle, and Piedmont Triad regions. Yet growth in these metros remains weak. Collectively, employment in these three metro regions has risen by 2.5 percent since December 2007, and the combined September unemployment rate in the three regions equaled 8.3, down from the 9.7 percent rate recorded one year ago. Of the three broad regions, the Research Triangle had the lowest unemployment rate (7.3 percent), followed by the Piedmont Triad (9.1 percent), and Charlotte (9.2 percent).

“Despite the broad decline in unemployment rates over the past year, labor market conditions across North Carolina remain far from normal,” said Quinterno. “Unemployment rates remain elevated across the state, and some 421,000 North Carolinians are jobless and seeking work, even though the odds of finding a job remain stacked against them.”

State Labor Market Sends Mixed Signals In Sept.

CHAPEL HILL (October 19, 2012) – North Carolina recorded no net job growth in September, as a decline in public-sector payrolls offset almost all of an increase in private-sector payrolls. Over the month, the state gained 100 more payroll jobs than it lost (+/-0.0 percent). At the same time, the number of employed North Carolinians rose, and both the number of unemployed persons and the statewide unemployment rate fell. These findings come from new data released by the Labor and Economic Analysis Division of the NC Department of Commerce.

“North Carolina’s labor market sent mixed signals in September,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “The overall number of jobs in the state held steady at 3.95 million, but the labor force grew in size and the number of employed persons rose. In the process, the statewide unemployment rate fell to 9.6 percent from 9.7 percent.”

In September, North Carolina employers added 100 more jobs than they cut (+/-0.0 percent). Private-sector payrolls netted 1,500 positions (+/-0.0 percent), while public-sector payrolls shed 1,400 jobs (-0.2 percent), due primarily to reductions in state government payroll levels. Within the private sector, professional and business services gained the most jobs (+6,000, +1.2 percent), with virtually all of the growth occurring in the administrative and waste management subsector. The leisure and hospitality sector netted 2,200 jobs (+0.5 percent), followed by construction (+1,100, +0.7 percent). At the other end of the spectrum, the finance sector shed the most jobs (-3,600 positions, -1.7 percent), followed by the trade, transportation, warehousing, and utilities sector (-3,000, -0.4 percent) and manufacturing (-1,200, -0.3 percent).

A revision to the August payroll data found that the state gained fewer jobs than first estimated (+600 versus +1,100). With that revision, North Carolina now has, on net, 223,700 fewer payroll positions (-5.4 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 3,310 payroll jobs per month, resulting in a cumulative gain of 102,600 positions (+2.7 percent).

“North Carolina’s labor market began 2012 on a strong footing, but it has stumbled as the year has progressed,” noted Quinterno. “Since March, the state’s labor market has given back 23.5 percent of the job gains recorded during the year’s first quarter. The general pattern in 2012 has been for job losses in the public sector to offset modest private-sector gains—a pattern especially evident in the year’s third quarter. Had public payroll levels held constant in 2012, the state now would have 5,800 more jobs, all else being equal.”

The household data for September offered a more positive view of labor market conditions. Last month, the unemployment rate fell to 9.6 percent, and the number of unemployed persons declined by 3,576 persons (-0.8 percent). Moreover, the number of employed North Carolinians rose (+29,232, +0.7 percent), as did the overall size of the labor force (+25,656, +0.6 percent).

Over the past year, the total number of unemployed North Carolinians has fallen by 48,682 persons (-9.8 percent), and the number of employed persons has grown by 61,656 persons (+1.5 percent). Put differently, more people report having jobs that was the case a year ago.

That said, the increase in employment is weak relative to the severity of the employment problems facing the state. North Carolina’s unemployment rate has exceeded 9 percent in every month since January 2009 and has ranged as high as 11.4 percent. Compared to December 2007, which was when the “Great Recession” began, the statewide unemployment rate is 4.6 percentage points higher, and the number of unemployed North Carolinians is 96 percent greater. During the first nine months of 2012, an average of 450,304 North Carolinians were unemployed in any given month.

Other troubling labor market indicators include a statewide unemployment rate that has exceeded 10 percent in 35 of the last 45 months and depressed labor force participation rates and employment-to-population ratios. Although both the labor force participation rate and employment-to-population ratio rose in September after having declined for six straight months, both measures remain near 36-year lows.

“Job growth in North Carolina has lagged over the course of 2012,” observed Quinterno. “Despite modest overall growth in the private sector, the state has just 0.5 percent more jobs than it did last December and only 0.8 percent more jobs than it did one year ago. While the number of employed persons has increased, unemployment remains extremely elevated.”

Where Do National Employment Numbers Come From?

(October 8, 2012) Last Friday, the U.S. Bureau of Labor Statistics released the national employment report for September 2012. As South by North Strategies, Ltd. (SBN) noted in its monthly analysis, the American economy gained an estimated 114,000 jobs in September, while the share of the labor force that was unemployed fell to 7.8 percent. That 7.8 percent figure was the lowest national monthly unemployment rate recorded since January 2009.

Normally, the release of national employment data for a given month, which occurs at 8:30 am on the first Friday of the following month, is a relatively straightforward event of interest mainly to policymakers, journalists, business executives, and analysts like SBN. At the same time, the report is one of the most important economic indicators to appear in a month, and the data hold the potential to drive markets, politics, and public policies. That explains why the release of information is tightly controlled, with accredited journalists subject to “lock-up conditions.”

Is The Fix In?
Due to the stakes associated with the upcoming presidential election, the September employment report has become enmeshed in political controversies and surrounded by conspiracy theories, some of which have been percolating at the state and local level for months.

As  John Cassidy of The New Yorker noted on Friday in his Rational Irrationality blog, the first allegations of number fixing occurred within five minutes of Friday’s data release, when on-air personalities at CNBC raised the issue. The claims were repeated throughout the day and were amplified through various print, broadcast, and online outlets, as well as through social media. The conspiracy theories seemingly received a further boost when  Jack Welch, the retired CEO of General Electric (and beloved mentor of Jack Donaghy of 30 Rock fame), tweeted that the data were suspect. (He later attempted to clarify his views.) More recently, Donald Trump expressed similar concerns on national television.

The past few days have seen a flurry of claims and counterclaims about the BLS figures, especially in the blogoshpere. Two points deserve mention. First, the numbers were not altered for political reasons and accusations to the contrary demonstrate an unfamiliarity with the processes used to generate these important statistics. Second, the September numbers are, by any objective measure, unimpressive and paint a picture of an economy that is generating too few jobs. The numbers are “good” only in relation to the disastrous conditions experienced since the onset of the “Great Recession” in December 2007.

As University of Oregon economist Tim Duy wrote on his well-regarded blog Fed Watch:

The jobs numbers are out, and they are reasonably solid.  Reasonably solid as long as you weren’t expecting miracles.  Very strong if you thought the economy was heading into recession.  But just about where they should be if you think the economy is just sort of grinding along at a slow but steady pace.

The professional view of SBN is broadly consistent with that of Professor Duy. At the same time, the recent flap is fascinating in how it has pushed an issue on which the firm works into the national spotlight and highlights just how unfamiliar many prominent people and ordinary citizens are with some of the nation’s most important economic statistics. Inspired by the remark long attributed to former U.S. Sen. Daniel Patrick Moynihan that “everyone is entitled to their own opinions, but they are not entitled to their own facts,” SBN would like to offer a quick, admittedly simplified, overview of from where national labor market statistics come.

Who Counts?
Responsibility for  measuring the labor market rests with the U.S. Bureau of Labor Statistics (BLS), an agency within the US Department of Labor. Founded in 1884, the BLS is the oldest permanent major federal statistical agency. Consistent with its founding in the late 19th century, the agency’s mission is to collect “information upon the subject of labor, its relation to capital, the hours of labor and the earnings of laboring men and women, and the means of promoting their material, social, intellectual, and moral prosperity.”

For most of its early history, the BLS had little more than fact-finding authority, but that changed during the 1930s when the magnitude of the Great Depression pushed labor market issues to the center of the national debate and led to the development of social scientific methods of measuring the labor market and associated phenomena like unemployment. Since 1959, the BLS has had sole responsibility for preparing national estimates of labor market conditions.

Today, the BLS, which has its headquarters in the District of Columbia, is responsible for collecting information on employment, unemployment, jobs, wages and benefits, prices, productivity, workplace conditions and injuries, consumer expenditures, time use, and international comparisons. The agency is staffed by professional civil servants with specialized knowledge of such fields as economics and statistics. With the exception of the Commissioner of Labor Statistics, who is nominated by the president and subject to confirmation by the U.S. Senate, none of the agency’s employees are political appointees; even the current commissioner is a career civil servant who is performing the job on an acting basis.

What Do They Count?
The United States is a large country with a sizable labor market. In September, almost 244 million Americans were old enough to be potentially in the civilian labor market, and 155 million persons were either employed or unemployed; the remainder were not participating in the labor force (seasonally unadjusted figures). Similarly, employers had nearly 134 million positions on their payrolls, of which 83.4 percent were in the private sector (again, seasonally unadjusted figures).

These estimates come from two different random surveys sponsored each month by the BLS. The first survey is the Current Population Survey (CPS), which is conducted for the BLS by the US Census Bureau. Each month, the CPS contacts 60,000 households chosen as representative of the civilian noninstitutional population ages 16 and older. A household selected for inclusion in the study participates eight times over an 18-month period. Interviews occur during the week containing the 19th of the month and ask for information pertaining to the week containing the 12th of the month. Participation is voluntary, and all responses are treated as confidential. (Note that different methods are used for state and local estimates.)

The second survey is the Current Employment Statistics (CES) program, which is a federal-state partnership that began in 1915. Each month, the BLS surveys some 486,000 individual business establishments and solicits information about wages, hours, and the total number of jobs on their payrolls during the week that includes the 12th of the month. The survey covers all types of payroll positions (supervisory, non-supervisory and production) and inquires into both full-time and part-time posts.

Because the survey frame is derived from unemployment insurance records, the CES only covers establishments subject to the unemployment insurance system, meaning that agricultural workplaces, domestic employers, and unincorporated small businesses not subject to unemployment insurance taxes are excluded. That said, almost all employed Americans work for establishments covered by unemployment insurance. Furthermore, the connection of survey coverage to the unemployment system means that is is possible to check the survey data against administrative tax records, which is done through a third BLS program called the Quarterly Census of Employment and Wages. Participation in the CES is voluntary, and responses are confidential. Also, the BLS suppresses any information that might permit the identification of individual business establishments.

As hopefully is clear from the preceding discussion, the CPS and CES measure two different things. The CPS measures persons, or individual human beings, typically those age 16 and older. The CES, meanwhile, is a measure of jobs, or positions on the payrolls of individual business establishments. There is not a 1-to-1 relationship between the number of persons and the number of jobs, due partly to persons who hold multiple jobs. Additionally, the two surveys have different geographic frames of reference. The CPS groups people by their place of residence, while the CES categorizes jobs by the place of work. So, a person who lives in Wake County, North Carolina but works in neighboring Durham County would be counted as employed in Wake County under the CPS, but his/her job would be included in the Durham County tally in the CES. It is because the surveys measure different things that they sometimes yield seemingly contradictory results, such as a large jump in employed persons occurring alongside seemingly modest growth in the number of payroll positions, which is what happened in September.
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Payrolls Expand, Unemployment Falls In September

CHAPEL HILL (October 5, 2012) – The national labor market added 114,000 more jobs than it lost in September. That payroll growth, while modest, helped to reduce the national unemployment rate to 7.8 percent, which was the lowest rate (seasonally adjusted) recorded since January 2009, when the rate also equaled 7.8 percent. Despite the improvements, job growth remained weak in September, and unemployment was elevated.

“September marked the 24th consecutive month of job growth in the United States,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Over the past three months, the national economy has netted an average of 146,000 jobs per month, a pace that, while positive, is insufficient to drive unemployment down to pre-recessionary levels anytime soon.”

In September, the nation’s employers added 114,000 more payroll positions than they cut. Gains occurred mainly in the private sector (+104,000), though government payrolls netted 10,000 positions due to a rise in state government education jobs tied to the start of the school year. Additionally, the payroll employment numbers for July and August underwent positive revisions; with the updates, the economy gained 323,000 jobs over those two months, rather than the 237,000 positions previously reported.

Within the private sector, payroll levels rose the most in the education and health services  sector (+49,000, with 88.8 percent of the gain occurring within the health care subsector), followed by the trade, transportation, and utilities sector (+25,000, with 68.4 percent of the growth occurring in the transportation and warehousing subsector). The manufacturing, sector, meanwhile, shed 16,000 positions, of which virtually all were tied to the manufacture of durable goods. All other industrial sectors experienced few changes in payroll levels.

“The American economy has added jobs every month for two years and has netted 1.3 million positions so far in 2012,” noted Quinterno. “The current average rate of job growth nevertheless will fail to close the large jobs gap facing the United States anytime soon.”

Slack labor market conditions were evident in the September household survey. Last month, 12.1 million Americans (7.8 percent of the labor force) were jobless and seeking work. The unemployment rate was the lowest one posted since January 2009, when 7.8 percent of the labor force also was unemployed. In September, the size of the labor force grew by 418,000 persons, and the share of the population participating in the labor force rose to 63.6 percent, a rate that nevertheless was below the one recorded last September. The share of the adult population with a job similarly rose yet remained at a depressed level (58.7 percent). Nevertheless, compared to a year ago, more Americans were working in September 2012, and fewer individuals were unemployed.

Last month, the unemployment rate was higher among adult male workers than female ones (7.3 percent versus 7 percent). Unemployment rates were higher among Black (13.4 percent) and Hispanic workers (9.9 percent) than among White ones (7 percent). The unemployment rate among teenagers was 23.7 percent. Moreover, 6.7 percent of all veterans were unemployed; the rate among recent veterans (served after September 2001) was 9.7 percent. At the same time, 13.5 percent of Americans with disabilities were jobless and seeking work (not seasonally adjusted).

Jobs remained scarce in September. Last month, the underemployment rate equaled 14.7 percent. Among unemployed workers, 40.1 percent had been jobless for at least six months with the average spell of unemployment lasting for 39.8 weeks. The leading cause of unemployment remained a job loss or the completion of a temporary job, which was the reason cited by 54.3 percent of unemployed persons in September. Another 27.4 percent of unemployed persons were reentrants to the labor market, while 10.4 percent were new entrants. Voluntary job leavers accounted for the remaining 7.9 percent of the total.

“Although the unemployment rate dropped to a 44-month low, the American labor market remains in distress,” observed Quinterno. “The overall rate of job growth is sub-par, and there simply are not enough jobs for all the Americans who desire work.”

“The drop in the unemployment rate in September should not obscure the fact that joblessness in America is at a level that would have been considered a national crisis in any recessionary period prior to the most recent one.”

Local Unemployment Rates Dropped In August

CHAPEL HILL (September 28, 2012) – Between August 2011 and August 2012, unemployment rates fell in 92 of North Carolina’s 100 counties and in 13 of the state’s 14 metropolitan areas. Over that same period, labor force sizes contracted or held steady in 70 counties and in five metro areas. These findings come from new estimates prepared by the Labor and Economic Analysis Division of the North Carolina Department of Commerce.

“Local unemployment rates dropped across most of North Carolina over the year,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Local labor market conditions nevertheless remained distressed in August, with 57 counties and five metros recording unemployment rates at or above 10 percent.”

Compared to December 2007, which is when the economy fell into recession, North Carolina has 5.4 percent fewer jobs (-223,300) and has seen its unadjusted unemployment rate climb from 4.7 percent to 9.7 percent. In August, the state gained 1,100 more payroll jobs than it lost (+/- 0.0 percent). Since bottoming out in February 2010, the state’s labor market has netted an average of 3,433 jobs per month, resulting in a cumulative gain of 103,000 positions (+2.7 percent).

Between July 2012 and August 2012, unemployment rates fell in 72 counties, rose in 18 counties, and were unchanged in 10 counties. Individual county rates ranged from 4.7 percent in Currituck County to 17.2 percent in Scotland County. Overall, 57 counties posted unemployment rates greater than or equal to 10 percent, and 42 counties posted rates between 5 and 10 percent.

“Non-metropolitan labor markets continue to struggle relative to metropolitan ones,” noted Quinterno. “In August, 10.8 percent of the non-metro labor force was unemployed, compared to 9.2 percent of the metro labor force. Compared to December 2007, the non-metro labor force is now 1.6 percent smaller in size, and seven percent fewer persons are employed. Meanwhile, the number of unemployed rural persons has grown by 91.5 percent and totals 142,238. Over the year, the non-metro labor force contracted by 23,595 persons, or 1.8 percent.”

Over the month, unemployment rates fell in 13 metro areas and rose in one metro. Rocky Mount had the highest unemployment rate (12.9 percent), followed by Fayetteville (11.2 percent). Durham-Chapel Hill had the lowest unemployment rate (7.6 percent), followed by Asheville (7.7 percent) and Raleigh-Cary (7.8 percent).

Compared to August 2011, unemployment rates are lower in 92 counties and in 13 metros. Over the year, labor force sizes contracted or held steady in 70 counties and in five metros. Among metros, Wilmington’s labor force contracted at the fastest rate (-2.3 percent), followed by Winston-Salem (-1.2 percent), Jacksonville (-0.3 percent), and Hickory-Morganton-Lenoir (-0.1 percent). With those changes, metro areas now are home to 71.7 percent of the state’s labor force, with 50.3 percent of the labor force residing in the Triangle, Triad, and Charlotte metros.

In the long term, any meaningful recovery will hinge on economic and employment growth in the Charlotte, Research Triangle, and Piedmont Triad regions. Yet their growth remains weak. Collectively, employment in these three metro regions has risen by 1.1 percent since December 2007, and the combined August unemployment rate in the three regions equaled 8.9, down from the 10.4 percent rate recorded one year ago. Of the three broad regions, the Research Triangle had the lowest unemployment rate (7.9 percent), followed by the Piedmont Triad (9.8 percent), and Charlotte (9.9 percent).

“Local unemployment rates fell across much of North Carolina over the past year, but conditions remain far from normal,” said Quinterno. “Unemployment rates remain elevated across the state, and some 450,000 North Carolinians are jobless and seeking work, even though the odds of finding a job remain stacked against them.”