State sees jobless rate fall further

But the 0.1 point drop reflects labor force shrinkage, not fewer unemployed.

Staff WriterOctober 23, 2010 

North Carolina's unemployment rate dipped slightly in September, the seventh straight month the rate has dropped, but the declines continue to be driven largely by a shrinking labor force.

The state's monthly jobless rate, released Friday by the N.C. Employment Security Commission, fell to 9.6 percent in September from 9.7 percent in August.

North Carolina's rate, which is now equal to the national unemployment rate, has fallen steadily since peaking at 11.2 percent in February.

But that decline has not corresponded with a significant decline in the number of unemployed.

"You've got a sizable drop in the unemployment rate, yet it doesn't look like the people who have lost jobs in this recession are any better off," said Mark Vitner, senior economist with Wells Fargo Securities in Charlotte. "It seems people have dropped out of the work force."

The state's labor force shrank for the fifth straight month in September, and job creation, particularly in the private sector, remains anemic.

North Carolina added 10,100 jobs in September, but just 500 were in the private sector.

The other 9,600 jobs were in the government sector, which includes schools.

"That's terrible," said John Quinterno, principal for South by North Strategies, a Chapel Hill research firm specializing in economic and social policy. "I can't really say it much more diplomatically than that."

Quinterno said that if the economic recovery were truly seeping into the labor market, it would translate into growing private sector payrolls and an expanding labor force, which would indicate that people who have been pushed out are now returning to look for work.

Since being laid off by Durham County in May, Joe Albiston estimates he's applied unsuccessfully for about 60 jobs.

Albiston, 46, spent five years monitoring environmental conditions at construction sites in Durham. He was let go after the number of active grading permits issued by the county fell by 65 percent once the housing market collapsed and lending for new construction dried up.

Albiston lives with his wife and two children in Cary. Unlike many Americans, his family is debt-free, a fact that is allowing him to resist taking low-paying jobs far outside his field.

Albiston said he is focusing on positions with state and local governments because he believes those will provide a path to retirement.

"What I hear from most of my friends in the industry is they don't think their retirement will be there," he said.

Vitner estimates that about two-thirds of the drop in the state's unemployment rate has been caused simply by people leaving the work force.

"That's not a sustainable mix," he said.

Vitner said the economy needs labor-intensive sectors, like manufacturing and service industries, to begin hiring in large numbers.

"It makes it tough to generate a self-sustaining recovery because without job growth, you don't have income growth," he said.

david.bracken@newsobserver.com or 919-829-4548

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