Press Release

Official jobless numbers mask need for fundamental reforms

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Click here to view and here to listen to Joseph Coletti discussing North Carolina’s latest unemployment data.

RALEIGH — North Carolina has little reason to celebrate as its official unemployment numbers start to look more like the average numbers posted across the country. The John Locke Foundation’s top budget expert offers that view as he examines North Carolina’s latest unemployment data.

“North Carolina’s unemployment rate exceeded the national average for 2 1/2 years, so some observers will trumpet data that show this state losing that dubious distinction,” said Joseph Coletti, JLF Director of Health and Fiscal Policy Studies. “But those observers are missing a key point.”

“The official unemployment rate does not count the discouraged workers who’ve stooped looking for jobs,” Coletti explained. “Thousands of unemployed workers quit actively seeking work in recent months, and that helped skew North Carolina’s real unemployment picture. According to the Bureau of Labor Statistics, just 56 percent of the eligible civilian noninstitutional population over the age of 16 is employed. That’s a lower percentage than at any point in the last 30 years and one of the lowest rates in the country.”

The N.C. Employment Security Commission’s latest report lists the state’s unemployment rate at 9.6 percent for September, down one-tenth of a percentage point from August’s rate of 9.7 percent.

The state’s official unemployment rate has spent three months below 10 percent after 16 consecutive months in double-digit territory. North Carolina’s unemployment rate now equals the national average for the first time in more than two years. The state rate had exceeded the national unemployment rate since February 2008.

While it’s nice to see the official unemployment rate fall, government officials could learn the wrong lessons from the data, Coletti said. “It’s particularly discouraging to hear Gov. Bev Perdue talking about the value of offering targeted tax breaks and special deals to selected companies.”

“In a recent column for U.S. News & World Report, the governor wrote, ‘In these difficult times, there is nothing more rewarding than convincing a company to move to, or expand in, North Carolina and create jobs,'” Coletti added. “When the governor says ‘convincing,’ she means promising some type of incentive or grant that will force the rest of North Carolina’s taxpayers to subsidize the company she’s wooing. That’s not the strategy this state needs to get its economy moving.”

Coletti suggests a different policy. “If the governor and state legislators would lower North Carolina’s uncompetitive marginal tax rates, lessen regulatory burdens, and take steps that would lead to real improvements in educational attainment, no business owner would need wheeling and dealing and special corporate handouts,” he said. “Investors and entrepreneurs would create jobs on their own, without creating new burdens for the state’s current taxpayers.”

Seasonally adjusted employment decreased in September by 6,600 workers to a total of 4.04 million, according to the ESC. Unemployment also decreased by about 6,500 workers, with more than 430,000 workers now listed as unemployed. The state rate in September 2009 was 10.9 percent.

It’s important to put the numbers in perspective, Coletti said. “At the beginning of 2008, there were about 4.3 million workers in North Carolina out of a labor force of 4.6 million, with an official jobless rate just under 5 percent,” he said. “Even as North Carolina’s current jobless numbers look more like those in the rest of the country, they’re still far worse than the picture we saw before the economic downturn.”

“North Carolina has a long way to go before we can feel good about our economy,” Coletti added. “We can make a tough process easier by removing the roadblocks to job growth — uncompetitive tax rates, burdensome regulations, and an economic development policy that squeezes existing taxpayers to pay for goodies government officials want to hand out to their favorite businesses.”

For more information, please contact Joseph Coletti at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].

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We are North Carolina’s Most Trusted and Influential Source of Common Sense. The John Locke Foundation was created in 1990 as an independent, nonprofit think tank that would work “for truth, for freedom, and for the future of North Carolina.” The Foundation is named for John Locke (1632-1704), an English philosopher whose writings inspired Thomas Jefferson and the other Founders.

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