State Unemployment Rate Drops, Matching Average National Rate

North Carolina’s unemployment rate dropped from 3.8% to 3.6% last month, according to the latest release from the North Carolina Department of Commerce. This rate is still above the state’s rate for February 2022, 3.4%. 

The national rate increased by the same amount and now matches North Carolina’s rate of 3.6%. The unemployment rate, though important, is a lagging indicator of economic growth or decline. 

The unemployment rate is calculated by a survey of households. There has been a divergence between this survey and the establishment survey, which surveys business payrolls to determine employment. As a result, a person with two jobs will count as one employed person in the household establishment but will appear on two different payrolls, inflating the employment count on the establishment survey. 

The establishment survey continues to show stronger gains, signaling an increase in people taking second jobs. 

Indeed, since last year the business payroll survey registered 131,000 more jobs more than the household survey in North Carolina. As inflation steams ahead, and recession looms, workers may be taking additional jobs just to stay afloat.

The state’s labor force participation rate plateaued in February, matching January’s rate of 60.4%. Overall, the labor force has shrunk. If the labor force participation were back to the pre-pandemic level of 61.2% our state would have 68,464 more people in the labor force.

Another negative economic indicator is found with decreasing working hours. Since last year, average work hours in North Carolina, though not seasonally adjusted, have decreased by 1.4%. This indicator is measured by the establishment survey of businesses, suggesting people could be taking more part-time jobs which would bring down the average hours worked overall. 

Declining real wages are an added area of concern. Over the last year, average private weekly wages (not seasonally adjusted) in North Carolina have only grown 4.4% while inflation runs hot at 6.0%. 

These combined indicators reveal a grimmer picture than the unemployment rates alone. Big government policies of overspending and disincentivizing work have consequences: record inflation and a shrinking labor force. As budget talks heat up in North Carolina, lawmakers would be wise to continue to restrain spending and incentivize work.