South By North Strategies, Ltd.

Another Poor Performance in NC

CHAPEL HILL (September 18, 2009) – Summer in North Carolina ended with another poor performance by the state’s labor market. In August, the state saw a small drop in in the unemployment rate (-0.1 percentage points) and a slight gain in the number of payroll positions (+7,000), according to the Employment Security Commission. Nevertheless, hundreds of thousands of North Carolinians are starting fall as they did summer: jobless and facing limited employment prospects.

“North Carolina’s labor market deteriorated all summer long,” says John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy. “North Carolina ended August with fewer total jobs, fewer private sector jobs, and a smaller labor force than it had at the the start of June.”

In August, North Carolina employers added 7,000 more positions than they shed. The gain was driven by an increase in government payrolls (+20,100). In contrast, private sector employers, eliminated 13,100 more positions than they created. With the exception of the construction industry, every major private industry reduced payrolls. The trade, transportation, and warehousing industry posted the largest numerical decline (-4,400). Relative to payroll sizes, employment in the information industry fell the most (-1.7 percent).

“The net employment gain posted in August must be taken with a spoonful of salt,” cautions Quinterno. “The gain is so slight that it easily could turn negative upon subsequent revision, as happened with June’s employment report. The gain also is partially offset by revisions to the July data that found that the state lost 2,100 more positions than first reported.”

“By any objective measure, job growth, especially the private-sector job growth vital to a long-term recovery, is not taking place in North Carolina,” adds Quinterno. “Despite the talk about an improving economy, North Carolina has fewer jobs — both total and private-sector ones – that it did at the start of June. And it has many fewer of both job types than it had one year ago.”

A similar story can be told about the state’s unemployment rate. The statewide, seasonally-adjusted rate dropped slightly in August, falling from 10.9 percent to 10.8 percent. Much of the drop was tied to a fall in the size of the labor force — a fall caused in large part by jobless individuals who stopped looking for work and therefore were excluded from the official count.

“The drop in the unemployment rate should not be exaggerated,” warns Quinterno. “Last month, nearly 15,000 individuals exited the labor force and were omitted from the monthly estimates. Furthermore, that decline is part of an ongoing pattern. From the start of June to the end of August, 46,561 North Carolinians left the labor force.”

“North Carolina’s labor market remains in weak shape, observes Quinterno. “Conditions steadily deteriorated all summer long, and on a variety of important employment indicators, North Carolina is worse off now than it was at the beginning of summer.”

“Perhaps the best that can be said is that things are not as bad as they could have been, thanks to modest improvements in the national economy and the federal recovery package,” adds Quinterno.

“Unfortunately, robust economic and job growth still appear to be way over the horizon.”

Contact: John Quinterno, Principal, (919)622-2392

New Report: Reversing NC’s Job Slide

WINSTON-SALEM (September 4, 2009) – By testing the limits of traditional methods of economic and workforce development, the recession is providing North Carolina with an opportunity to deploy a different approach to job creation and skill formation known as jobs-centered development. This model holds the potential to cultivate the skilled workforces demanded by local businesses and expand the opportunities available to area residents, especially low-income ones.

These insights come from the new study When Any Job Isn’t Enough: Jobs Centered Development in the American South. The report’s purpose was to analyze changes in development practices that have occurred across the South over the past decade and identify lessons relevant to current realities. The analysis was commissioned by the Mary Reynolds Babcock Foundation in Winston-Salem and prepared by South by North Strategies, Ltd. in Chapel Hill.

“For some time, communities around the South have recognized that development strategies that simply sell a place on the basis of low costs seldom create living wage jobs for the long term,” says Gayle Williams, executive director of the Babcock Foundation. “At the same time, many places quietly have crafted more integrated approaches that serve the needs of businesses, workers, and communities. Our intention is to spotlight good ideas and learn what works where.”

“Jobs-centered development is an emerging alternative to traditional models of economic and workforce development,” explains John Quinterno, a principal at South by North Strategies and the author of the report. “The goal is to increase community prosperity by simultaneously meeting the workforce needs of local firms and the career-building and skill development needs of local workers, especially low-income ones.”

Because jobs-centered development is a relatively new, relatively localized approach, it lacks a standard model. Nevertheless, research suggests that successful efforts are regional ones built upon five building blocks: 1) an awareness of the macro context; 2) an understanding of the regional economy; 3) knowledge of industry realities; 4) a commitment to worker development and advancement; and 5) the involvement of high-performing intermediary organizations. These components then can be combined to deliver a variety of strategies tailored to local conditions.

“North Carolina is home to an impressive number of jobs-centered development efforts,” observes Quinterno. “In western North Carolina, Hand Made in America has used jobs-centered development techniques tied to entrepreneurship to catalyze the growth of a multi-million dollar crafts industry across a 25-county area. In Greensboro, the Latino Pathways Project created by MDC, Inc. and a local consortium of educational and service providers has helped local health care employers fill job openings while launching recent immigrants on career paths.”

“North Carolina is a regional leader in the jobs-centered development field,” adds Quinterno. “Unfortunately, many promising efforts have received limited funding and have struggled to achieve scale.”

“The current recession represents a test of, and opportunity for, jobs-centered development,” continues Quinterno. “On the one hand, many models were developed in response to the tight labor markets of the late 1990s, not the high unemployment environment of today. On the other hand, the federal recovery act has extended significant financial support for such initiatives, particularly those related to health care and the ‘green economy.’ The challenge is to adapt to current conditions and leverage resources for the maximum benefit of all North Carolinians.”

To meet the recessionary challenges, concludes the report, practitioners and supporters of jobs-centered development should direct their attention to four areas. First, they could reposition themselves to respond to changes in regional economies. Second, they have a chance to leverage federal funds for the specific benefit of low-income workers and low-wealth communities. Third, they could invest in the capacities of intermediary organizations. Lastly, there is an opportunity to for improvements to social insurance and educational policies.

To view the report When Any Job Isn’t Enough: Jobs Centered Development in the American South, visit the web site of the Mary Reynolds Babcock Foundation. The site contains the full report and a condensed summary.

Contacts John Quinterno, South by North Strategies, Ltd., (919) 622-2392 and Gayle Williams, The Mary Reynolds Babcock Foundation, (336) 748-9222

Another Rough Month for US Workers

CHAPEL HILL (September 4, 2009) – National employment numbers released today show that August was the 20th straight month in which the economy eliminated more jobs than it added. Another 216,000 jobs were lost, and the unemployment rate rose to 9.7 percent.

“By an objective measure, August was a rough month for working Americans,” says John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Jobs continued to disappear, and individuals seeking work found it increasingly difficult to find positions.”

In August, employers across the nation eliminated 216,000 more payroll positions than they added. Also, revisions to the July data revealed that the economy lost 29,000 more positions than first reported (-276,000 positions versus -247,000).

August job losses were widespread with the greatest numerical declines occurring in construction (-65,000), manufacturing (-63,000), and financial activities (-28,000). Education and health service (+52,000) was the only industry to post a sizable increase.

“The pace of job losses has moderated in recent months, thanks in part to federal recovery spending,” notes Quinterno. “The easing is welcome, but the bottom line is that the job market still is deteriorating.”

That decline is reflected in the household data released this morning. In June, 9.7 percent of the labor force – 14.9 million Americans – were jobless and actively seeking work. Proportionally more adult male workers were unemployed than female ones (10.1 percent versus 7.6 percent). Similarly, unemployment rates were higher among Black (15.1 percent) and Hispanic workers (13 percent) than among White ones (8.9 percent).

“Jobless individuals are finding it increasingly difficult to find new positions,” adds Quinterno. “Last month, one-third of all unemployed workers had been out of work for at least six months. Many more individuals either had given up on finding new positions or were working fewer hours than they needed or wanted.”

Today’s national data suggest that another weak employment report is in store for North Carolina. Since the recession’s start, North Carolina employers have eliminated, on net, 258,000 positions, and the statewide unemployment rate has climbed to 11 percent.

Contact: John Quinterno, Principal, (919) 622-2392

Same Song, Different Beat in NC

CHAPEL HILL (August 28, 2009) – Despite some small fluctuations in individual county unemployment rates, local labor markets across North Carolina remained extraordinarily weak in July. Last month, 69 counties posted double-digit rates of unemployment; of these, 39 had unemployment rates of at least 12 percent. These findings come from data released today by the Employment Security Commission.

“The basic employment story in communities across North Carolina remained unchanged in July,” says John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy. “While conditions are not deteriorating as sharply as they were earlier in the year, they are not improving either.”

July was the 10th consecutive month in which North Carolina employers eliminated more jobs than they created (-26,400). Since the start of the recession, North Carolina has lost, on net, 258,000 payroll jobs – an amount equivalent to over 6 percent of all the jobs that existed in December 2007. Furthermore, 11.1 percent of the labor force was unemployed (unadjusted rate) in July.

Last month, every part of the state faced weak labor markets. Unemployment rates exceeded 10 percent in 69 counties, and in 39 counties, at least 12 percent of the labor force was jobless and actively seeking work. County unemployment rates ranged  from 5.5 percent in Currituck and Hyde counties to 17.1 percent in Scotland County.

All 14 of the state’s metropolitan areas also struggled in July. Last month, eight metros posted double-digit unemployment rates. The Hickory-Morganton-Lenoir area had the highest unemployment rate (15.1 percent) followed by Rocky Mount (14.3 percent). The lowest metropolitan unemployment rate was 8.3 percent in Durham-Chapel Hill.

“For any meaningful statewide labor market recovery to occur, job growth will need to resume in North Carolina’s three major metropolitan areas,” notes Quinterno. “There was little evidence of this happening in July. Last month, unemployment rates stood at 13 percent in Charlotte, 11.6 percent in the Piedmont Triad, and 9.1 percent in the Research Triangle.”

Some observes may look to drops in county unemployment rates between June and July as a sign that conditions are improving, but this comparison is a misleading one. Monthly local unemployment rates are not adjusted for seasonal effects, which can be quite pronounced during the summer, especially in tourist communities. The more accurate comparison is to contrast local data from July 2009 and July 2008.

“Local unemployment rates soared between July 2008 and July 2009,” explains Quinterno. “Last month, 82 counties had unemployment rates that were at least 1.5 times greater than the ones recorded a year ago. The same dynamic occurred in 10 of the state’s 14 metropolitan areas.”

“The July employment report suggests that the pace of job loss in North Carolina has slowed, thanks in part to the federal recovery package, but the overall trajectory remains a downward one,” says Quinterno.

“Overall economic conditions remain quite weak, and unless the demand for goods and services increases, North Carolina communities will struggle with high levels of joblessness well into the future.”

Contact: John Quinterno, Principal, (919) 622-2392

Job Loss Resumes Its Upward Climb in NC

CHAPEL HILL (August 21, 2009) – After pausing briefly at the beginning of summer, job loss in North Carolina resumed its upward climb in July. Last month, employers eliminated 26,400 more positions than they created. Furthermore, downward revisions to the June payroll data erased the slight employment gain that initially had been reported for that month. July consequently marks the 10th consecutive month in which North Carolina recorded a net loss of jobs. These findings come from data released today by the Employment Security Commission.

“The pace of job loss has slowed in recent months, but the overall trajectory remains a downward one,” says John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy issues. “An easing in the pace of job loss isn’t the same thing as a labor market recovery.”

In July, North Carolina employers shed 26,400 more jobs than they added. The overwhelming majority of those job losses occurred in the public sector (-21,300) with local governments responsible for most of those losses. Private-sector employers, meanwhile, recorded a net loss of 5,100 positions. While employment in most private industries declined or held steady, net hiring in professional and business services and leisure and hospitality services managed to offset many of the other losses.

“No meaningful labor market recovery will occur without private-sector hiring,” notes Quinterno. “Since last October, North Carolina’s private-sector employers have eliminated, on net, 194,400 positions. While the pace of private-sector job loss recently has moderated, little evidence points to a robust turnaround. Recent reductions in public-sector employment only will compound the problems tied to the reduction of private-sector opportunities.”

For additional perspective on private-sector employment, compare payroll figures from July 2009 to those from July 2008. Over the year, private employers eliminated, on net, 214,400 positions. With the exception of education and health services (+11,200), every major non-governmental industry contracted. The greatest numerical declines occurred in manufacturing (-77,400); construction (-47,600); and professional and business services (-40,700). Relative to payroll sizes, construction employment fell the most, down 19.8 percent.

Job losses have contributed to the sharp rise in North Carolina’s unemployment rate. In July, 496,867 individuals were unemployed. Over the year, the number of unemployed North Carolinians has nearly doubled while the unemployment rate has climbed to 11 percent.

“North Carolina’s high unemployment rate actually understates the extent of the employment problems facing North Carolinians,” adds Quinterno. “July was the third straight month in which the size of the labor force declined. This suggests that jobless individuals abandoned their employment searches, yet such individuals are not included in official unemployment count.”

“Little in the July employment report points to an imminent recovery,” cautions Quinterno. “High levels of joblessness likely will persist and will serve to restrain consumer spending. Unless demand for goods and services returns, private-sector employers are unlikely to begin adding positions in meaningful numbers.”

“While it appears that the worst job losses might be behind North Carolina, thanks in part to the federal recovery package, that does not mean that economic growth is just around the corner,” he adds. “A jobless recovery appears to be taking shape.”

Contact: John Quinterno, Principal, (919) 622-2392