STATE: N.C.'s lower unemployment rate spurs optimism locally

Jan. 29, 2014 @ 05:00 AM

The unemployment rate in North Carolina remained above average last month but is dropping faster than the national rate, according to government data released Tuesday — prompting one local official to predict that the downward trend would also hold true for Lee County.

In fact, North Carolina's unemployment rate dropped more than any other state's from December 2012 to December 2013. In just the last two months of 2013, the state's unemployment rate dropped from 7.4 to 6.9 percent; the national rate dropped from 7.0 to 6.7 percent in that same period.

The state declined to extend federal unemployment benefits last summer and also passed a slew of tax reforms; Gov. Pat McCrory sent out a statement just after Tuesday's unemployment data was released crediting those and other policies with the drop in unemployment.

"The trend of more people getting back to work in North Carolina is great news for our state," McCrory said. "We continue to see that our pro-growth and pro-jobs policies enacted over the last year are having a positive impact and getting people into jobs."

Policy debates aside, the mathematics of North Carolina's decrease in unemployment — which in December mirrored a trend which has lasted several months at the local, state and national levels — show two factors at play: About 19,000 people got jobs last month, and about 21,000 unemployed people simply gave up on trying to find a job and dropped out of the workforce altogether.

Bob Joyce, president of the Sanford Area Chamber of Commerce, said that even though the local numbers aren't available yet, he thinks Lee County's unemployment rate will decrease yet again, following the same formula as the state.

"Things just get better and better, but they're going in small steps," he said, adding that many of those dropping out of the workforce are Baby Boomers who retire early instead of trying to start a new job or even a new career.

"That's a phenomenon that's going to continue for another 10 years," Joyce said.

And while McCrory only made an indirect allusion to the state's denial of federal unemployment benefits leading to a lower unemployment rate, U.S. Rep. Renee Ellmers (R-NC) gave full credit to the controversial decision.

"(The state's unemployment drop) comes after North Carolina declined to extend federal unemployment benefits for nearly 70,000 people in July," she said in a written statement. "In the three months following this decision, civilian employment in our state rose by 39,400. ... Governor Pat McCrory and the Republican-led General Assembly have instituted important economic reforms that have led to the successes we are witnessing today."

That assertion has some academic backing; a study recently published by a European university found that the state has experienced a steady rise in overall employment ever since the benefits were cut. However, the study's author stressed that correlation does not always equal causation.

"Only a few months of data are available, and sample sizes available in most data sets are too small to yield reliable predictions of month-to-month changes in variables such as employment, unemployment, etc," Marcus Hagedorn, of the University of Oslo, wrote. "So the evidence provided (in the study) should be interpreted with extreme caution."

In 2013, North Carolina's private sector added 64,900 jobs while the state government cut 400 jobs, according to state data. Within the private sector, most large industries grew. Professional and business services led the way, adding more than 22,000 jobs in 2013, followed by the trade, transportation and utilities industry, which added nearly 19,000 jobs. The only major industry to shrink was construction, which lost 3,700 jobs.

Joyce said the addition of 64,500 jobs is good for the state as a whole, but the report contains mixed news for areas like Lee County. The industries adding the most jobs are primarily based in urban areas, he said, so not much of that growth trickles down to suburban and rural areas.

"For mainstreet merchants, the economy is still tough because we don't have as many people earning paychecks as we did," he said. "So I think that says a lot as to why this recovery, in some cases, doesn't feel like a recovery."

Yet for larger businesses, he said, the recovery does appear to be a little more real.

"When you talk to the manufacturers in our community, things are good," Joyce said. "... I've talked to folks at Coty, at Moen, at Arden, at Caterpillar, at Magneti Marelli, and they're adding people."