State unemployment rate hits low, but recovery still elusive

Where will job losses fall as state leaders tackle balancing the budget and closing the $2.4 billion gap? Photo by Angie Newsome — Tuesday’s jobs announcement reported that North Carolina’s December unemployment rate fell to 6.9 percent — the lowest rate in five years. But what do these numbers mean, and what has the impact of state and federal unemployment benefits been on Western North Carolina? Angie Newsome/Carolina Public Press

The big news out of Tuesday’s jobs report was that North Carolina saw one of the biggest month-to-month drops in its state unemployment rate, which fell one-half percent from 7.4 percent to 6.9 percent in December — the lowest rate in five years.

Driving that number was a healthy increase of 11,100 jobs led by the trade, transportation and utilities sector, which includes retail, wholesale trade, trucking and warehouse jobs.

Gov. Pat McCrory and Speaker of the House and U.S. Senate candidate Thom Tillis followed the announcement with statements tying the dropping unemployment rate to their policies.

“We continue to see that our pro-growth and pro-jobs policies enacted over the last year are having a positive impact and getting people into jobs,” McCrory said in a statement released minutes after the latest figures were announced.

And while the numbers appear to be headed in the right direction, a deeper dive into the data reveals a more mixed set of results, including clues to the role a hotly debated cutback in state and federal unemployment benefits is having in reducing the unemployment rate.

Unemployment, labor participation rate declines

The December numbers show an accelerated decline in unemployment in the past year, where rates fell 2.5 percent, putting the state closer to the national average of 6.7 percent. North Carolina has also added 64,000 jobs in the past 12 months.

But at the same time, the state’s labor participation rate, a key indicator that measures the percentage of the population those working or looking, has fallen sharply since the benefit cuts took effect.

John Quinterno, an economist with Triangle-based South by North Strategies, has been tracking the labor force issues as the state’s economy recovers. An analysis released Tuesday notes that the 64,000 jobs created in 2013 was a reduction from 2012’s 89,000 new jobs.

“While the unemployment rate did fall sharply over the course of 2013, the number of employed persons barely changed, meaning that unemployment fell due to people leaving the labor market altogether rather than finding work,” he said. “None of the 2013 data suggests that North Carolina’s labor market has turned a corner and has moved onto a more robust, more sustainable trajectory.”

This month, North Carolina’s unemployment benefits debate went national when it was folded into the Congressional battle over extending federal emergency unemployment benefits, which ended in late December after Congress failed to re-authorization the emergency benefits program.

In rhetoric similar to debates heard last year in this state, GOP leaders in congress say people are relying on benefits rather than taking available jobs. Democrats pushing for reviving the emergency benefits say there still aren’t enough jobs and cutting the program adds unnecessary hardship for the long-term unemployed.

A hub and The Hub

In Western North Carolina, which includes some of the North Carolina counties hardest hit by unemployment in the Great Recession, the mixed picture is evident — and a reminder that the rebound in the state’s economy is not evenly shared either geographically or between sectors.

Here, economic successes come in different forms — a fleet of new breweries around Asheville, a new stable in Polk County, a small coffee shop in the heart of Robbinsville, in Graham County — as local governments try to find the right combination to increase work opportunities.

“We’ve been chugging back non-stop for several years now,” Tom Tveidt, who leads the Asheville-based SYNEVA Economics, said of the rebound in Buncombe County, where the size of the workforce has returned the region’s economic hub to pre-recession levels.

The Sierra Nevada investment is emblematic of the resurgence, he said, but it is far from alone.

Tveidt, whose firm conducts analysis for local governments and regional economic centers, said there were 11 new business registrations for beverage manufacturers in Buncombe County last year. Despite that, he said, it was not the fastest growing sector.

“The majority of our gains were in health care and tourism,” he said.

The growth in the two sectors has helped to cut the county’s unemployment rate from a peak of 9.5 percent in early 2010 to 5.1 percent in November 2013, the most recent countywide unemployment rate reported. That rate is likely to fall further when December results for individual counties are reported next week.

Tveidt said the jump in the two sectors is an indication of the shift in the local economy and Asheville’s role as a regional hub. “It’s significant,” he said. “Health care and tourism are going to be bigger then even before.”

That’s good and bad news in the long run, he said. Health-care jobs tend to pay higher-than-average wages, while tourism pays lower than the average and include more seasonal and part-time jobs.

Unemployment rates, labor force selected WNC counties

Andy Cable, economic development director for Graham County, said he doesn’t expect to see a major project swoop in to change the jobs picture in a place that’s had the highest countywide unemployment rate in the state throughout much of the past few years.

He said the strategy is to keep Stanley Furniture, the county’s largest employer, healthy while also helping spur the growth of small businesses. “We want to cultivate a small-businesses and entrepreneurial attitude,” he said.

Cable said The Hub, a new coffee shop in Robbinsville that employs eight people, and the county’s small farms and tourism businesses are the future for the county, of which about 70 percent is federal land.

The county has also boosted its fiber optic capabilities to try and attract professionals looking for a good location to work and live. “We’re trying to emphasize our quality of life,” Cable said.

The next set of county rates, which will include county breakdowns of December’s numbers, are due to be published next week. Graham is likely to post another reduction in its unemployment rate, which peaked in November 2010 at 23.5 percent and, as of November 2013, stood at 11.8 percent.

Cable said it’s evident that, although it may be difficult to measure, part of the drop in unemployment came when people who’d lost their benefits took whatever job they could. But he said it’s also clear that the county has lost workers as a result. “I think you saw people who were losing their benefits move to where they could find work,” Cable said.

Libby Johnson, the director of the Economic and Tourism Development Commission in Polk County, said the county continues to pursue a similar strategy of encouraging small businesses. While there are still some textile jobs in the county, Polk’s biggest asset now is its appeal to riders and retirees.

“The economic driver here is equine,” Johnson said. “People move here every day because of it.” Farriers are now some highest-paid workers in the county, she said.

But despite its success in maintaining an unemployment rate far lower than the state average, Johnson said there a sense that the rates don’t tell the whole story. “Our unemployment rate is 4.9 percent, considerably better than other places, but there are still a lot of people here without jobs,” she said.

Numbers versus need

Cindy Threlkeld, executive director of MANNA Foodbank, which works with 220 agencies in 16 WNC counties, said the unemployment numbers might have changed, but the need has not.

She said the pantry saw a big growth in need after unemployment benefit cuts and reductions in food stamps kicked in late last year.

“We really saw an uptick when that happened,” she said. “We saw more people that used to be able to make it work hitting a wall.”

The food bank and the organizations it works with now distribute food to roughly one out of every six people in its service region, which equals more than 100,000 people.

This season has been tough for WNC, she said, with exceptionally cold weather increasing heating bills just as the reduction in unemployment benefits and food stamp cuts hit.

“We had a brutal start to the winter,” she said. “When you look at that combination, [the cuts] definitely have had an impact.”

Going forward, she said, there’s some hope that jobs will come back, but a real worry that, until then, policy makers are counting on food banks, faith-based organizations and other non-profits to fill the gap.

“We were already scrambling,” she said. “What was already a challenging situation is even more of a challenge. Even though it looks like the economy is improving for people living with food insecurity, it’s not.”