South By North Strategies, Ltd.

Midyear Job Market Review Released

CHAPEL HILL (June 30, 2010) – North Carolina’s job market limped through the first half of 2010. While not shedding jobs at the frantic pace of 2008-09, North Carolina’s job market recorded little progress during the first part of the calendar year. Furthermore, considerable evidence suggests that more difficulties are in store for 2010’s second half.

These findings come from a midyear 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 major developments to date.

“Although North Carolina netted jobs during the first half of 2010, the growth was insufficient to reverse the serious damage inflicted by the recession,” says John Quinterno, a principal with South by North Strategies, Ltd. “Much of the growth was attributable to temporary developments caused by public policies, but the underlying trends remain concerning.”

The review notes that the second half of 2010 may be a difficult time for the state’s labor market. Many of the policy supports that helped during the first half of the year are unwinding, and it is unclear what will take their place in supporting demand. And the employment and spending reductions that will result from state budget cuts only will compound the difficulties.

The review is particularly concerned about the problem of long-term unemployment.

“If the worsening pattern of long-term unemployment is not reversed soon, many individuals will become effectively unemployable due to the deterioration of their skills, 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=3210

Another Unimpressive Jobs Report

CHAPEL HILL (June 25, 2010) –  North Carolina’s local labor markets underwent few real changes in May, according to preliminary data released today by the Employment Security Commission. In May, 53 counties posted double-digit unemployment rates, and 21 counties recorded unemployment rates of at least 12 percent.

“The May employment report is unimpressive,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “While local unemployment rates have fallen over the past year, they remain unacceptably high. Perhaps the best that can be said is that conditions could be worse.”

Since the recession’s onset in December 2007, North Carolina has shed 6.1 percent of its payroll employment base (-254,000 positions) and has seen its unadjusted unemployment rate climb from 4.7 percent to 9.9 percent.

Every part of the state experienced weak labor markets in May. Unemployment rates exceeded 10 percent in 53 counties, and in 21 counties at least 12 percent of the labor force was jobless and actively seeking work. County unemployment rates ranged from 4.9 percent in Currituck County to 16 percent in Scotland County.

“Labor markets in non-metropolitan communities are particularly weak,” adds Quinterno. “Last month, 10.8 percent of the non-metro labor force was unemployed, compared to 9.5 percent of the metro labor force. More alarmingly, the non-metropolitan labor force continued to shrink. Since December 2007, the non-metropolitan labor force has contracted by 1.1 percent. Many of those missing individuals are effectively jobless.”

Last month, unemployment rates fell in 10 of the state’s metropolitan areas, and 11 metros gained more jobs than they lost. Nevertheless, five metros posted double-digit unemployment rates. The Hickory-Morganton-Lenoir area had the highest unemployment rate (13 percent) followed by Rocky Mount (12.9 percent). The lowest metro unemployment rate was 7.3 percent in Durham-Chapel Hill.

“Because of the lack of seasonal adjustments, monthly fluctuations in local unemployment rates must be interpreted cautiously, especially at this time of year,” warns Quinterno. “A better comparison is an annual one.”

Compared to May 2009, unemployment rates were the same or lower in 99 counties and 14 metro areas. Yet compared to a year ago, 73 counties and four metro areas had smaller labor forces. Among metros, Hickory-Morganton-Lenoir posted the largest decline in the size of its labor force (-2.9 percent), followed by Rocky Mount (-2 percent). Jacksonville posted the largest gain (+5.4 percent).

“Despite stabilization in labor market conditions, the long-term employment picture remains the same,” cautions Quinterno. “The sustained job growth needed to absorb displaced individuals and new workers simply isn’t occurring.”

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 3.8 percent since the start of the recession. The overall May unemployment rate in the major metros equaled 9.5 percent. Of the three areas, the Research Triangle had the lowest May unemployment rate (8 percent), followed by the Piedmont Triad (10.4 percent) and Charlotte (11.4 percent).

“The second half of 2010 could be even more difficult for North Carolinians seeking work,” observes Quinterno. “Private-sector job growth is anemic, and much recent growth has resulted from government actions like temporary census hiring, home tax credits, emergency unemployment, and recovery spending. Many of those supports are ending, and it is unclear what will take their place in supporting overall demand.”

Consider the emergency unemployment benefits that the U.S. Congress has failed to extend. Explains Quinterno: “Over the last 12 months, unemployed North Carolinians received $5.5 billion in regular state payments and federal emergency benefits. These payments generated an estimated $9 billion in statewide economic activity. In May, the federal Emergency Unemployment Compensation program alone generated $383 million in economic activity. Congress’ decision to allow that funding to expire will exacerbate the weak employment conditions found  across the state.”

Less Than Meets The Eye

CHAPEL HILL (June 18, 2010) – The May employment report for North Carolina paints a picture of a fragile labor market. Last month, the state added 12,900 more payroll positions than it lost. The gains were concentrated in the public sector due to significant hiring by the federal government, most likely for temporary census positions.

“The May employment report is less impressive than it appears,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Private-sector payrolls contracted, and net job growth overwhelmingly was driven by public-sector hiring, primarily by the federal government.”

In May, employers added 12,900 more positions than they eliminated. The public sector netted 16,100 positions with federal hiring accounting for 80 percent of the total. Total private-sector payrolls, in contrast, fell by 3,200 positions. Among private industries, manufacturing shed the most positions (-2,900) followed by leisure and hospitality services (-2,700), Those losses were offset by gains in professional and business services (+1,600) and trade, transportation, and utilities (+1,300). And a revision to the April data raised net payroll growth for that month from 7,500 to 10,200.

“So far in 2010, payroll employment in North Carolina has grown by 31,300 positions, which is only slightly greater than the number needed to keep pace with population growth,” notes Quinterno. “The private sector has netted just 14,100 positions, and many of the public-sector jobs that have been gained likely are temporary ones. This is not the road to a swift and sustainable recovery.”

Despite a recent moderation in job losses, conditions stagnated over the past year. Compared to May 2009, the state had 3,300 fewer jobs (-0.1 percent). In terms of individual industries, construction (-22,600) and manufacturing (-21,600) lost the greatest number of positions over the past year, while construction declined the most in relative terms (-11.6 percent). Government employment grew the most in actual (+39,900 positions) and relative (+5.6 percent) terms. Since December 2007, North Carolina has lost, on net, 254,000 positions or 6.1 percent of its payroll employment base.

Stabilizing labor market conditions are reflected in May’s household data. Last month, the labor force contracted by 0.1 percent as 6,027 individuals stopped working or seeking work. The number of employed individuals rose, and the number of unemployed individuals declined. The unemployment rate therefore dipped from 10.8 percent to 10.3 percent. Since the start of the recession, the number of unemployed Tar Heels has grown by 123.3 percent, and the unemployment rate has jumped from 4.7 percent to 10.3 percent.

“The second half of 2010 could be quite difficult for North Carolinians seeking work,” cautions Quinterno. “Private-sector job growth is anemic, and much of the recent growth has resulted from such government actions as temporary census hiring, housing tax credits, emergency unemployment insurance benefits, and recovery act funding. Many of these policy supports are ending, and it is unclear what will take their place in supporting overall demand.”

At Least The Census Bureau Is Hiring

CHAPEL HILL (June 4, 2010) – The national employment report for May is an unimpressive one. Last month, employers added 431,000 more payroll positions than they eliminated. Almost all of the gain, however, was attributable to the hiring of temporary workers by the U.S. Census Bureau.

“The May payroll report is much less impressive than it first seems,” said John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Almost all job growth was due to temporary hiring by the U.S. Census Bureau. When census hiring is excluded, the nation netted just 20,000 positions in May.”

In May, the nation’s employers added 431,000 more payroll positions than they cut. Gains occurred primarily in the public sector due to the hiring of 411,000 temporary census workers by the federal government. The rest of the economy netted just 20,000 positions. The largest private-sector gains occurred in manufacturing (+29,000) and in professional and business services (+22,000), primarily in the temporary help services sub-industry. Construction payrolls fell by 35,000 positions, which erased many of the industry’s recent gains. All other major industry groups recorded little or no change.

“The May employment report is an uninspiring one that highlights just how dependent the economy is upon policy supports and government action,” noted Quinterno. “If not for temporary census hiring, the numbers would be much worse.”

Weak job prospects also are reflected in the May household survey. Last month, 15 million Americans – 9.7 percent of the labor force –  were jobless and actively seeking work. Proportionally more adult male workers were unemployed than female ones (9.8 percent vs. 8.1 percent). Similarly, unemployment rates were higher among Black (15.5 percent) and Hispanic workers (12.4 percent) than among White ones (8.8 percent). The unemployment rate among teenagers was 26.4 percent.

Furthermore, newly available data show that 7.8 percent of all veterans were unemployed in May; the rate among veterans who had served since September 2001 was 10.6 percent.

“In developments inconsistent with recovery, 322,000 individuals left the labor force in May, and the share of the adult population engaged in economically productive activities fell,” added Quinterno. “Compared to a year ago, the labor force is smaller, fewer people are employed, and more people are unemployed.”

Jobs remained hard to find in May. Last month, 46 percent of all unemployed workers had been jobless for at least six months. Many other individuals simply stopped looking, and counting those individuals and those working part-time on an involuntary basis brings the underemployment rate to 16.6 percent.

“Strip away census hiring, and the May employment report is weak,” observed Quinterno. “The economy remains dependent on public supports, and it is unclear if it will be able to stand on its own as those supports fall away over the summer.”

Local Labor Markets Move Sideways in April

CHAPEL HILL (May 28, 2010) –  Local labor market conditions across North Carolina remained weak in April, according to preliminary data released today by the Employment Security Commission. In April, 63 counties posted double-digit unemployment rates, and 23 counties recorded unemployment rates of at least 12 percent.

“Weak conditions remained the norm in April,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “While conditions in many places have stabilized during 2010, few meaningful improvements have occurred. Most job markets are moving sideways, and there is little to celebrate.”

Since the recession’s onset in December 2007, North Carolina has shed 6.5 percent of its payroll employment base (-270,000 positions) and has seen its unadjusted unemployment rate climb from 4.7 percent to 10 percent.

Every part of the state experienced weak labor markets in April. Unemployment rates exceeded 10 percent in 63 counties, and in 23 counties, at least 12 percent of the labor force was jobless and actively seeking work. County unemployment rates ranged from 5.8 percent in Currituck County to 15.8 percent in Scotland County.

“The recession continues to batter the state’s non-metropolitan communities,” adds Quinterno. “Last month, 11.1 percent of the non-metro labor force was unemployed, compared to 9.6 percent of the metro labor force. Since December 2007, the number of employed individuals in non-metro areas has fallen by 6.7 percent while the number of unemployed individuals has grown by 98 percent.”

Last month, unemployment rates fell in all 14 of the state’s metropolitan areas, and every metro but Rocky Mount netted jobs. Nevertheless, five metros posted double-digit unemployment rates. The Hickory-Morganton-Lenoir area had the highest unemployment rate (13.3 percent) followed by Rocky Mount (13 percent). The lowest metro unemployment rate was 7.2 percent in Durham-Chapel Hill.

“Because of the lack of seasonal adjustments, monthly fluctuations in local unemployment rates must be interpreted cautiously, especially since unemployment normally rises at the start of the year before dipping in the spring,” cautions Quinterno. “A better comparison is a yearly one.”

Compared to April 2009, unemployment rates were the same or higher in 22 counties and 3 metro areas. And compared to a year ago, 68 counties and 6 metro areas had smaller labor forces. Among metros, Hickory-Morganton-Lenoir posted the largest decline in the size of its labor force (-3.3 percent), followed by Burlington (-2.1 percent). Jacksonville posted the largest gain (+6.8 percent).

“Despite some stabilization in labor market conditions, the long-term employment picture remains the same,” cautions Quinterno. “The sustained job growth needed to absorb displaced individuals and new workers simply isn’t occurring.”

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 Piedmont Triad. Yet job growth in 2010 has been sluggish. Collectively, employment in these three major metro regions has fallen by 3.9 percent since the start of the recession. The overall April unemployment rate in the major metros equaled 9.5 percent. Of the three areas, the Research Triangle had the lowest April unemployment rate (8.1 percent), followed by the Piedmont Triad (10.5 percent) and Charlotte (11.6 percent).

“One piece of good news contained in the April 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 $5.4 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 $8.9 billion in statewide economic activity.”