NC jobless rates rise slightly in May

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The state’s unemployment rate reversed course for the first time in 11 months during May, rising 0.2 percentage points to 6.4 percent, the N.C. Commerce Department reported Friday. (Image: The Winston-Salem Journal)

RALEIGH, N.C. — The state’s unemployment rate reversed course for the first time in 11 months during May, rising 0.2 percentage points to 6.4 percent, the N.C. Commerce Department reported Friday, according to the Winston-Salem Journal.

The monthly report, as has been the case for nearly a year, has a good-news, bad-news element to it.

There was a net gain of 5,700 private-sector and 400 government jobs from April to May.

However, there was a lot of churn in the 10 private-sector employment categories.

For example, in the employer survey, there was a net gain of 7,400 jobs in the lower-wage sector of leisure and hospitality services, along with 2,300 in trade, transportation and utilities.

There also was a loss of 3,400 jobs in professional and business services and 2,200 in manufacturing.

The May data provides more support to a study released earlier this week by the left-leaning N.C. Budget & Center, which found that 80 percent of the jobs created in the state from June 2009 to September 2013 paid less than $33,709 a year.

In the household survey, there was a net gain of 18,982 in the state labor force (those with a job or actively looking for one) to just below 4.7 million. That breaks down to 10,187 more North Carolinians listed as employed and 8,795 listed as unemployed.

The increase in the unemployed ranks likely signified that more people re-entered the labor force during May.

The employment data does not distinguish how many of those workers are full time, temporary or part time. When people stop looking for work, they are no longer considered unemployed for the purpose of calculating the jobless rate, which tends to lower the rate.

“At least the rate went up for the right reason, the labor force rose twice as fast as employment did,” said Mark Vitner, a senior economist with Wells Fargo Securities.

Most economists agree that a year-over-year look is a better measure of how the state economy is performing.

The jobless rate is down 1.9 percentage points from 8.3 percent in May 2013. The April rate of 6.2 percent represented its lowest level since July 2008 – three months before the brunt of economic downturn began to be felt.

In the employer survey, the state has had a net gain of 79,300 private-sector jobs year over year, as well as a loss of 1,700 government jobs. The biggest gains were in professional and business services (27,000), trade, transportation and utilities (19,700) and leisure and hospitality services (12,100).

In the household survey, the state had an overall loss of 8,307 in the labor force – 81,982 more North Carolinians listed as employed and 90,299 fewer listed as unemployed, signaling that most dropped out of the labor force.

“The nonfarm employment numbers remains strong, with payrolls up 1.9 percent year to year,” Vitner said.

“North Carolina’s recovery remains on track, and I believe we will continue to see strong gains in coming months. We are also seeing some firming in the manufacturing sector, even though payrolls are down slightly year-to-year.”

Gov. Pat McCrory and Republican legislative leaders say contributing factors to the drop in the state jobless rate have been significantly reducing the maximum and minimum weekly number of unemployment insurance (UI) benefits since January, as well as the maximum weekly amount from $535 to $350 since July 2013.

They said the tough-love UI benefits approach has made individuals more willing to take available jobs, including at lower wages and potentially below their skill level, as their benefits run out.

However, several research groups, such as the Economic Policy Institute, say there are at least three applicants for every job opening in North Carolina.

The traditional jobless rate does not include several categories of people, including those who have stopped looking for work, including for job training or other educational efforts, are retired, are underemployed for their work skills, are able to work full time but can only get part-time work, or are receiving a severance package after the elimination of their job.

A rate compiled by the U.S. Bureau of Labor Statistics, the U6 index, includes those categories. As of March 31 (the latest available), the U6 index rate for North Carolina was 13.6 percent compared with 12.2 percent nationally as of May 31.

The benefit changes are permanent unless amended by legislators.

The current calculation formula will drop the number of weeks from a maximum of 19 weeks to 14 weeks and a minimum of 12 weeks to seven weeks on July 6. Affected are individuals who claim begins that week.

Before the law was enacted, the maximum benefit amount was 26 weeks — the same level that 44 states still maintain. The lowest current maximum benefit limit is 18 weeks in Georgia, while Florida also is at 19.

House Bill 1069, co-sponsored by Rep. Julia Howard, R-Davie, would eliminate the minimum week criteria. The maximum weeks would not drop below 12 even if the state jobless rate fell below 5.5 percent.

The bill cleared its final legislative step Thursday and is headed to McCrory for signing. Because the bill would become law July 1 if passed, it could replace the existing sliding-scale provision before its next changes takes effect.

“Despite some recent progress around the margins of the state’s labor market, conditions remain far from healthy,” said John Quinterno, a principal with South by South Strategies, a research firm specializing in economic and social policy.

“Look beyond the important-yet-limited measure of the unemployment rate, and one will see a labor market that is netting jobs at the same sluggish pace (1.8 percent annually) that has characterized the past few years.

“North Carolina simply still is struggling with the consequences of the last recession.”

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