RALEIGH — The latest federal employment report delivers excellent news for North Carolina. That’s the assessment from the John Locke Foundation’s chairman, who notes that state employers added 14,000 new jobs in September. That means a net employment gain of 108,500 over the past year.
“That’s a year-over-year growth rate of 2.7 percent, far higher than the national average of 1.9 percent, the Southeast average of 1.9 percent, and the growth rates of all our neighboring states,” said JLF Chairman John Hood.
North Carolina’s official unemployment rate for September was 6.7 percent, according to the U.S. Bureau of Labor Statistics. That rate is down 0.1 percentage point from August and down 1 full percentage point from a 7.7 percent unemployment rate in September 2013. The national unemployment rate for September 2014 is 5.9 percent.
Hood’s analysis is based on the U.S. Bureau of Labor Statistics’ establishment survey of employers. He notes that other September data reported from a household survey don’t paint as good a picture.
While the unemployment rate dipped to 6.7 percent, both the employment and labor force counts also dipped. From September 2013 to September 2014, the household survey shows a drop of 49,000 in unemployment and an employment gain of 18,000. “That trend is wildly out of sync with the more-reliable jobs count from the establishment survey, which shows an employment gain nearly 10 times as big over the past year and has a much larger sample size in North Carolina and other states,” Hood said.
This statistical discrepancy between the household and establishment surveys is apparent in a number of other states, particularly in the Southeast, Hood said. That discrepancy has been the source of considerable debate and speculation by reporters and economists. “The general consensus is that the establishment survey is far more likely to provide an accurate depiction of the labor market.”
Hood also applies the latest data to the ongoing argument about the economic impact of recent state government reforms. “While it remains too early to draw any firm conclusions about the tax reform and other economic policies enacted by the General Assembly last year, it’s not too early to look at longer-term trends in the performance of the state’s economy compared to the predictions of those opposed to conservative reform.”
“Since the enactment of the new Republican-led legislature’s first budget, tax, and regulatory policies in mid-2011, North Carolina has added some 252,700 net new jobs,” Hood said. “That employment gain from June 2011 to September 2014 amounts to a growth rate of 6.5 percent. Again, this is higher than the national (5.8 percent) and regional (4.8 percent) averages.”
Other economic measures confirm the trend, Hood said. “From 2011 to 2013, North Carolina’s gross domestic product grew by an annual rate of 2.4 percent in inflation-adjusted terms, higher than the national (2.2 percent) and regional (1.8 percent) averages,” he said. “During the same period, per-capita incomes rose 2.9 percent in North Carolina, 2.8 percent in the nation as a whole, and 2.3 percent in the Southeast as a whole.”
It’s important to put North Carolina’s latest employment data in the proper context, Hood said. “Compared to past economic recoveries, North Carolina’s growth rate remains underwhelming — but this is a national phenomenon, not one limited to our state,” he said. “Obviously governors and legislatures can’t offset the effects of the national and international forces that dominate economic trends.”
“But compared to our regional peers and the national average, North Carolina’s economy is doing well,” Hood added. “Those who predicted a different economic outcome back in 2011 and 2012, when the General Assembly began adopting its conservative fiscal and regulatory policies, should be held accountable for their lack of foresight — although they probably won’t be.”