NC jobless rate ticks lower to 8.8 percent

lfinaldi@newsobserver.comJune 21, 2013 

North Carolina’s unemployment rate fell for the fourth consecutive month in May to 8.8 percent, but the slight drop was largely due to a shrinking labor force rather than the creation of new jobs, economists said.

The state lost 5,900 jobs over the past month, according to a payroll survey of employers included in Friday’s report from the state Department of Commerce’s Labor and Economic Analysis Division. North Carolina has added 54,800 jobs over the past year, an annual growth rate of 1.8 percent. The May unemployment rate was one-tenth of a percentage point lower than the 8.9 percent rate recorded in April.

While the state’s falling jobless rate is a welcome sign, it’s not the best indicator of the health of the job market, said John Quinterno of South by North Strategies, a Chapel Hill economic and social policy consulting firm.

“The bottom line is, (this is) essentially the same kind of very unimpressive employment report that we’ve seen in North Carolina, really, for a period of a few years,” Quinterno said. “We’re not seeing the level of job growth – payroll employee growth – that would eliminate the gap and job shortage we have in the state.”

The largest month-over-month job increase was in the leisure and hospitality services sector, which added 6,300 jobs in May. The sector has also had the strongest gains over the past 12 months, adding 25,200 jobs – nearly 46 percent of all the jobs created in the state during that period.

Michael Walden, an N.C. State University economist, said this is indicative of a growing economy because it could mean more people are going on vacation.

However, Quinterno said the growth of these jobs, which generally yield low wages and few benefits, raises concerns about the quality of positions in industries on the rise.

“That’s a concern that during this whole recovery we have essentially traded high-wage jobs for low-wage jobs, jobs that tend to be characterized by things like low wages and contingent work schedules,” he said. Oftentimes in these jobs, employees do not “know how much they’re going to make from week to week,” Quinterno said.

Several major industries saw a decrease in employment in May. Trade, transportation and utilities lost 3,800 jobs, professional and business services lost 2,000, and financial activities lost 1,700.

The slumping construction industry, which has been slow to bounce back despite the housing market’s recovery, lost 2,600 jobs in May. The industry has lost 6,000 jobs over the past year.

The state’s unemployment is now the lowest it’s been since December 2008, and has fallen seven-tenths of a percentage point since January.

Beginning July 1, a new state law will cut the unemployment benefits of workers laid off after that date by about a third. The change could lead the unemployed to seek aid through part-time, lower wage or even temporary employment, said Mark Vitner, a senior economist at Wells Fargo in Charlotte.

“Extending unemployment benefits tends to raise the unemployment rate over time because it gives people more time to look for jobs in their field,” Vitner said. “It will look like we’ve had a pick-up in employment, when in fact we’ll have an increase in part-time employment for lower-paying jobs.”

The national unemployment rate rose in May to 7.6 percent, up from 7.5 percent in April. North Carolina has the fifth-highest unemployment rate in the country.

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