State cuts push up N.C. jobless rate

Employment Security Commission finds 10,200 fewer government jobs in June.

Staff WriterJuly 23, 2011 

  • Jobless rates in 28 states and Washington, D.C., rose in June, the Labor Department reported Friday. Rates fell in eight states.

    Twenty-six states reported a net gain in jobs in June, while 24 states lost jobs.

    Nevada had the highest unemployment rate among the states for the 13th straight month. It rose in June to 12.4 percent, up from 12.1 percent in May. It was followed by California (11.8 percent) and Rhode Island (10.8 percent).

    North Dakota reported the lowest unemployment rate, at 3.2 percent. Booming oil, agriculture and manufacturing industries have helped the state keep the nation's lowest unemployment rate since November 2008. It was followed by Nebraska (4.1 percent) and South Dakota (4.8 percent).

    Tennessee, Missouri and Virginia reported the biggest job losses. Tennessee said 16,900 jobs were cut last month, led by steep losses in state and local government. Missouri suffered its biggest losses in education and health services.

    Associated Press

North Carolina's jobless rate rose to 9.9 percent in June, the highest level since last fall and the first increase in more than a year.

The increase, from 9.7 percent in May, reflects a bleak situation for job seekers as private businesses and governments cut positions or remain reluctant to add staff.

North Carolina's unemployment rate remains well above the national average, which also rose in June to 9.2 percent.

The latest data are a sign that the state's budget cuts are taking a toll. There were 10,200 fewer government jobs in June as the state, local governments, community colleges and universities eliminated positions, the N.C. Employment Security Commission reported Friday.

With key elections looming in 2012, the stubbornly high jobless rate has become a political hot button.

"No one cares that GDP is up or corporate revenue is up; they only care about the job market," said N.C. State economist Michael Walden. "It feeds into people's perception that the economy is still bad."

A year ago, the state rate was 10.5 percent. There had been slow improvement, but high fuel costs, a lingering housing slump and other factors have eroded confidence that hiring will rebound quickly in the wake of the recession.

The debt-ceiling and budget debate in Washington is rattling nerves even more, and spurring employers to postpone hiring, said Mark Vitner, a Wells Fargo Securities economist in Charlotte.

"If something goes wrong anywhere in the world, it undermines any positive momentum that the economy has going," Vitner added.

Just this week, Cisco Systems announced plans to cut 6,500 jobs, and bankrupt Borders Group said it will close its remaining 399 stores by September, laying off thousands more across the country. The Cisco cuts are expected to hit hundreds of people at its Research Triangle Park campus, where the technology company employs about 4,900 workers and contractors.

In Friday's report, the leisure and hospitality sector was the biggest bright spot, with 4,400 jobs added. ESC Chairwoman Lynn Holmes noted that Gov. Bev Perdue "continues to make job growth a top priority."

In recent weeks, Perdue has announced financial incentives to attract planned expansions that are expected to add hundreds of jobs at companies such as Lord Corp. in Cary, Semprius in Henderson, Spirit AeroSystems in Kinston and Time Warner Cable in Charlotte. The challenge with new-jobs announcements is that much of that hiring will happen over an extended period.

"Most hiring takes place with individual businesses adding one or two people at a time," Vitner said. "That's what really seems to be lacking now, with people being extra cautious."

State GOP Chairman Robin Hayes used Friday's gloomy employment report as evidence that Democrats' efforts aren't helping job seekers.

"These job figures are a somber reminder that Gov. Perdue and President Obama are nothing more than roadblocks to job-creation, and we cannot afford another four more years of their failed economic policies," he said in a statement.

Others blamed state budget cuts for the rising numbers, noting that this is just the first wave of job losses.

"We can draw a direct line between this rise in unemployment and the loss of public sector jobs," said Alexandra Forter Sirota, director of the NC Budget & Tax Center. "As state job losses continue to mount, we will likely see more pronounced economic effects throughout North Carolina."

More private jobs

According to the ESC report, private sector jobs have increased 28,900 over the year, while government has shed 31,600.

While the Triangle continues to fare better than the rest of the state, the local jobless rate is still high by historic comparisons. The May rate for this region was 7.7 percent, after adjusting for seasonal factors. The ESC is scheduled to release county-specific data for June next Friday.

There are some local companies in hiring mode, including SciQuest in Cary, Cree in Durham and Red Hat in Raleigh.

Longistics, a Raleigh business that helps pharmaceutical companies ship their products, held a job fair last weekend to find 50 drivers. Well more than 50 candidates turned out, and company officials are reviewing a number of "top quality" applicants, said Lou Tapper, vice president of global business development.

The company also is shifting some dispatch and customer-service positions to Raleigh from Memphis.

"We're in a growth mode, in all segments of our business," Tapper said. "We've expanded our market, and we've gotten some good contracts lately that we've taken from our competitors."

alan.wolf@newsobserver.com or 919-829-4572

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