According to the latest jobs report, North Carolina’s headline unemployment rate fell to 6.5 percent in August, down from 8.5 percent in July.
Good news worth celebrating, right?
Don’t pop the cork on that champagne just yet.
This was mostly a statistical artifact, not a major improvement in the state’s labor market.
While the government counted about 100,000 fewer North Carolinians as unemployed last month, only 28,000 got jobs. The remaining 72,000 dropped out of the labor force.
In other words, they either gave up looking for a job in North Carolina, or left the state. In a healthy economic recovery, your labor force should be growing, not shrinking.
Indeed – according to other measures – North Carolina is experiencing the worst economic recovery in the Southeastern United States.
Let’s begin with the issue I just referenced: labor-force participation.
In February, 61.6 percent of North Carolinians at least 16 years of age and not living in some kind of institution were participating in the labor force. That is, they were either employed or actively looking for a job.
In August, that rate was 57.5 percent. North Carolina’s labor-force participation is down 3.9 percentage points. The other 11 states in the Southeast all had smaller declines. The regional average dropped by just 1.5 points.
Now let’s look at employment itself. Unlike the unemployment and participation-rate statistics, the government’s job count comes from a survey of employers, not households. This survey has a much-larger sample size and produces more stable results.
Unfortunately, it doesn’t paint a rosier picture of our state’s labor-market recovery to date.
In August, North Carolina employers reported 4.3 million filled positions. That comes to about 350,000 fewer jobs than in February, before the onset of the COVID-19 recession, a drop of 7.6 percent in total employment.
Again, that’s the worst performance in the Southeast.
The next hardest-hit state, Louisiana, experienced a seven percent decline during the same period. Among our neighbors, employment fell 6.1 percent in Virginia, 5.6 percent in South Carolina, 5.4 percent in Tennessee and 4.7 percent in Georgia.
Perhaps our labor markets will look much healthier by October or November than they do right now.
Taking an accurate temperature of any economy is always a challenging task – and COVID has made it more so in many ways.
Right now, though – based on the available evidence – it would be fair to say that North
Carolina’s economic recovery is sputtering. Thousands of North Carolinians are finding new jobs every month, to be sure, but thousands more – frustrated, depressed, angry – are being left behind.
For some, their employers or their own small businesses have gone bankrupt. Others have intact employers but – faced with school closures – are having to cut back their hours at work, or leave their jobs altogether, so they can stay home with their young children.
And some are exiting the state in search of better opportunities elsewhere in the region.
As we are in the middle of election season, you are of course free to draw whatever political conclusions you like.
But first, please just give a thought – and say a prayer – for the North Carolinians who are suffering.
John Hood is the chairman of the John Locke Foundation. He can be reached via email, jhood@johnlocke.org.