South By North Strategies, Ltd.

Still Seeking Signs Of A Recovery

CHAPEL HILL (July 29, 2011) – Between June 2010 and June 2011, unemployment rates rose in 43 of North Carolina’s 100 counties and in five of the state’s 14 metropolitan areas. At the same time, 64 counties and 11 metro areas had labor forces in June that were smaller than one year ago. These findings come from new estimates from the Employment Security Commission.

“June was a terrible month for local labor markets across North Carolina,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “There were few signs suggesting that any kind of meaningful recovery was underway.”

Since the economy fell into recession in December 2007, North Carolina has lost, on net, 7.2 percent of its payroll employment base (-301,100 positions) and has seen its unadjusted unemployment rate climb from 4.7 percent to the current level of 10.4 percent. In June, the state lost 9,500 more payroll jobs than it gained. Over the past year, employers cumulatively eliminated 2,700 more payroll jobs than they added.

Unemployment rates rose in 91 counties in June, held steady in three counties, and fell in six counties. Unemployment rates were at or above 10 percent in 68 counties. Individual county rates in June ranged from 5.5 percent in Currituck County to 17.1 percent in Scotland County. Compared to a year ago, unemployment rates were lower in 52 counties, unchanged in five counties, and higher in 43 counties.

“Labor markets in non-metropolitan communities remain especially pressured,” added Quinterno. “Last month, 11.3 percent of the non-metro labor force was unemployed, as opposed to 10 percent of the metro labor force. When compared to December 2007, the non-metro labor force is 2 percent smaller, while the metro labor force is 1.6 percent larger.”

Last month, unemployment rates rose in all of the state’s metropolitan areas. Rocky Mount had the highest rate (13.7 percent), followed by the Hickory-Morganton-Lenoir area (12.5 percent). Durham-Chapel Hill had the lowest rate (8 percent), followed by Asheville (8.2 percent).

Compared to June 2010, unemployment rates were higher in 43 counties and five metro areas. Moreover, 64 counties and 11 metro areas had smaller labor forces. Among metros, Hickory-Morganton-Lenoir (-3.2 percent) recorded the largest decline in the size of the labor force, followed by Goldsboro (-2.2 percent). Rocky Mount posted the largest increase (+1.1 percent), followed by Jacksonville (+0.8 percent) and Raleigh-Cary (+0.2 percent).

In the long term, any meaningful recovery will hinge on growth in the state’s three major regions: Charlotte, the Research Triangle, and the Piedmont Triad. Yet growth remains sluggish. Collectively, employment in these three metro regions has fallen by 4.5 percent since December 2007, and the combined June unemployment rate in the three major metros equaled 9.8 percent. Of the three areas, the Research Triangle had the lowest unemployment rate (8.5 percent), followed by the Piedmont Triad (10.6 percent) and Charlotte (11.5 percent).

“North Carolina’s labor market remains down and out,” said Quinterno. “The job growth needed to restore full employment simply is not occurring. Going forward, there are more factors weighing against growth than propelling it forward. Most indicators are pointing in the wrong direction, and 2011 is shaping up to be another miserable year for North Carolina’s local job markets.”

Work Sharing: A Modest Proposal

Dean Baker of the Center for Economic and Policy Research explains the potential benefits of work sharing as a response to weak labor market conditions.

Work sharing is not a new idea. The idea of shortening work time to create more work has a long history. In the context of an economy that is at full employment, this approach can be seen as misguided, since legislated reductions in work time can lead to increased inflationary pressure and economic distortions. However, in an economy that is operating well below its potential – and projected to remain so for much of the next decade – work sharing may be the most viable way of bringing the economy back closer to full employment.
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Germany is the model in this respect. It has aggressively promoted a policy of work sharing, along with other measures aimed at persuading employers to retain workers. As a result, its standardized unemployment rate now stands at 6.7 percent, 0.4 percentage points below the rate at the start of the downturn. This remarkable achievement was not due to superior economic growth. Through the fourth quarter of 2010, the growth rate of Germany’s economy since the start of the downturn had actually lagged somewhat behind the growth rate of the United States. The fact that Germany’s unemployment rate had fallen, while the unemployment rate in the United States had risen by 4.4 percentage points, was entirely due to different labor-market responses to the downturn.

Around The Dial – July 28, 1011

Economic policy reports, blog postings, and media stories of interest:

• Naked Capitalism notes the bank reaction to proposed IRA rules.
• Mark Thoma says economist’s should listen more.
• Marshall Auerback argues that current administration is “worse than Hoover.”
• Simon Johnson asks if the US or Europe is in worse shape.
• The Washington Post reports on a slowing economy.

NC Unemployment Claims: Week of 7/9/11

For the benefit week ending on July 9th,  18,911 North Carolinians filed initial claims for state unemployment insurance benefits, and 120,142 individuals applied for state-funded continuing benefits. Compared to the prior week, there were more initial and continuing claims. These figures come from data released by the U.S. Department of Labor.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 13,837 initial claims were filed over the previous four weeks, along with an average of 112,502 continuing claims. Compared to the previous four-week period, the averages of initial and continuing claims were higher.

One year ago, the four-week average for initial claims stood at 13,963 and the four-week average of continuing claims equaled 147,373.

While the number of claims has dropped over the past year so has covered employment. Last week, covered employment totaled 3.71 million, down from 3.79 million a year ago.

The graph shows the changes in unemployment insurance claims (as a share of covered employment) in North Carolina since the recession’s start in December 2007.

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably. Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.

Patent Trolls

This American Life reports on the resurgence of patent trolling and how it harms economic activity.