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Justice Center: Jobs Report Shows Higher Unemployment, Anemic Job Creation, and Shrinking Labor Force

Aug. 19, 2013. North Carolina’s unemployment rate jumped to 8.9 percent in July, according to the latest jobs report from the Division of Employment Security—a symptom of deeper, long-term problems with the state’s labor market.

Most troubling is the 12,000 worker drop in the labor force—the pool of prime-aged workers who are employed or looking for a job—despite overall population growth. As a result, the labor force is now at the lowest levels since February 2012—a sign that too many unemployed workers are giving up on finding work altogether. If the workforce continues to shrink, it is unlikely that the state will be able to completely replace the 328,000 jobs lost during the Great Recession or meet the needs of a growing population.

Total private sector job creation—as measured by the survey of establishments—is also a cause for concern. The state created just 13,500 private sector jobs last month and just 73,100 jobs over the last year.  At this rate of annual job creation, it will take another 19 months for North Carolina to generate the 120,000 new jobs needed to get back to pre-recession employment levels. 

“July’s job numbers are cause for concern. North Carolina is struggling just to replace the jobs lost during the Great Recession, much less keep with rapid population growth,” said Allan Freyer, Public Policy Analyst with the North Carolina Budget and Tax Center.  “And as long as there are three unemployed workers for every one job, we’re not going to see much improvement.”

An additional cause for concern is the fact that the state’s fastest growing industry pays the lowest wages.  Over the last year, Leisure and Hospitality Services grew by 21,500 jobs, accounting for almost a quarter of the total employment growth in the state.  Unfortunately, this industry pays $8.30 an hour, more than $12 below the statewide average—suggesting that the state’s growth opportunities are in ultra-low wage jobs.

“Today’s jobs report makes it clear that the majority of all job creation is occurring in industries that don’t pay a living wage,” said Freyer.  “It’s hard to see how the state’s economy can continue to improve without significant income growth to support consumer spending at local businesses.”