RALEIGH — Newly released employment data show signs of growing strength in the North Carolina economy, with the second-highest reported annual increase in new jobs in the state since the onset of the Great Recession. That’s the assessment of John Locke Foundation President John Hood.
The rate of job growth has increased in North Carolina since July, when extended federal unemployment insurance benefits ended in the state.
The N.C. Employment Security Commission’s latest report lists the state’s official unemployment rate at 6.9 percent for December 2013. That’s down a full one-half of a percentage point from the 7.4 percent rate reported in November. The official state unemployment rate was 9.4 percent in December 2012.
The state rate remains 0.2 percentage points above the national rate of 6.7 percent. That’s the smallest gap between North Carolina’s rate and the national rate in more than a year.
“In the year ending in December 2013, North Carolina added 64,500 net new jobs,” Hood said. “That’s a higher number of new jobs than in all but one of the employment reports issued since North Carolina started dealing with the impact of the Great Recession.”
The December jobs report pokes holes in a key argument from left-of-center activists, who have contended that the end of extended federal unemployment insurance benefits in North Carolina would hurt the state’s employment picture.
“North Carolina has added jobs at a much faster rate in the second half of 2013 than it did in the first half of the year, when extended UI benefits were still in place,” Hood said. “That’s consistent with empirical research suggesting that extended benefits deter both creating and taking jobs. The picture for 2013 is also contrary to the pattern in 2012, when North Carolina’s job growth was somewhat stronger in the first half of the year than it was in the second half.”
The state’s labor force declined from 4.76 million in December 2012 to 4.65 million in December 2013, but Hood says that decline offers no more support for left-of-center arguments about unemployment insurance.
“Yes, North Carolina experienced a decline in the labor force, but so did the rest of the country,” he said. “The decline began in early 2013 and has been particularly large in Southeastern states. The state’s exit from extended unemployment benefits in July could not possibly be the cause of the trend. For example, Georgia experienced a similar decline in the labor force, and Tennessee a larger decline than North Carolina’s, even though both states retained their UI extended benefits through the end of 2013. Other demographic, regional, and sectoral factors not related to North Carolina public policies are clearly at work.”
The new data also rebut the notion that North Carolina’s improvements are based solely on poor measurement of workers struggling to find full-time work, Hood said.
“According to broader federal surveys of the labor market, North Carolina’s lower unemployment rate is not due to an increased number of either discouraged workers or those forced to take part-time jobs when they would rather be working full-time,” he said. “The most recent U-6 rate, which includes those groups, is an annual average ending in September 2013. For North Carolina, that rate is 14.9 percent. That’s a substantial decline from the 17 percent U-6 posted during the previous year.”
“It’s hard to look at the latest jobs report as anything other than a strong signal that North Carolina’s economy is improving,” Hood added. “The rate of improvement is also picking up strength, pouring cold water on the notion that the state’s economic health depends on continuing to pay people not to work.”