Media Contact: Dr. Mike Walden, 919.515.4671 or email@example.com
By Dr. Mike Walden
North Carolina Cooperative Extension
North Carolina received a nice Christmas present right before people gathered with friends and family for the holiday season. More than 30,000 jobs were added to the state’s employment rolls in November, and the unemployment rate slide from 9.3 percent to 9.1 percent. Of course, there is usually extra hiring during the holiday season, but these numbers adjust for that typical seasonal trend.
The November job numbers are also significant in another way. North Carolina’s growth in jobs since the bottom of the recession (February 2010) now exceeds the comparable growth rate in jobs at the national level.
Specifically, from February 2010 to November 2012, North Carolina added jobs at a 3.8 percent rate, compared to 3.6 percent for the nation. Also, both North Carolina’s and the nation’s unemployment rates have now dropped 2.3 percentage points from their peak.
Of course, the state is by no means out of the woods from the job losses suffered during the recession. Manufacturing always gets hit harder during economic downturns due the ability of buyers to postpone purchases of durable products. In the 2007-2009 recession, manufacturing fell twice as fast as the overall economy.
And because North Carolina has a much bigger chunk of its economy in manufacturing — twice as much as the nation in terms of sales value — recessions always hit our state harder. The state lost 8 percent of its job base during the recession, compared to 6 percent for the nation.
Yet the fact that our state’s job growth in the last three years has now exceeded the nation’s pace is encouraging. The question is: Will it continue?
Several reasons point to a yes answer. First is history. Traditionally, North Carolina loses more during recessions but gains more when the economy resumes growing. Consider the recession of the early 2000s. From 2001 to 2003, North Carolina lost 4 percent of her jobs, while the nation lost 2 percent. But in the economic recovery of 2003 to 2008, our state added jobs at almost twice the rate as the country (12 percent versus 7 percent).
Of course, history may not be repeated. But there are other reasons to be optimistic about jobs in our state. Compared to the country, North Carolina’s workers are more affordable and more productive. That is, pay is lower, but productivity is higher. Businesses like this situation. So when firms are looking for places to locate in the country, they know they’ll get a good deal and a good day’s work in North Carolina.
However, won’t new jobs just go to foreign countries? Not necessarily, at least not anymore. For example, worker wages in China have increased five-fold since 2000, while changing very little in the U.S. Indeed, a just-released study shows worker wages in the U.S. rising the slowest last year among 15 major industrialized countries.
Other factors are helping the competitive position of both the U.S. and North Carolina. Higher oil prices are making it more costly to transport finished goods from overseas factories. At the same time, lower domestic natural gas prices are reducing energy costs to U.S. factories.
Finally, some U.S. companies producing in foreign countries have had trouble with property rights, a fancy term meaning the protection of confidential plans and procedures.
North Carolina can also market itself as a “right to work” state, which makes it more difficult for unions to organize workers. While this is certainly a controversial topic — the pros and cons of unions can be debated — many companies prefer to do business in states that give them more control over worker costs and rules.
It also is a plus that our state is located in the fast-growing southeast, because locating in North Carolina puts a business in proximity to expanding population markets. North Carolina also has highly rated and relatively (compared to other states) inexpensive community college and public university systems. So businesses know workers in North Carolina have access to top flight education and training programs.
Still, despite these advantages, North Carolina faces important job challenges. Most economic forecasters predict the unemployment rate will continue to decline — but slowly — taking several years to reach 6 percent. Many of the long-term unemployed do not have the correct set of skills for today’s jobs. Income growth will likely continue to be uneven. Those with college degrees will see their incomes advance faster than those without degrees.
So the job clouds are finally parting, leaving some sunshine to peak through. But we’re far from a sunny jobs sky. You decide what, individually and collectively, we can do to brighten every job hunter’s day!
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Dr. Mike Walden is a William Neal Reynolds Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of N.C. State University’s College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy. The College of Agriculture and Life Sciences communications unit provides his You Decide column every two weeks. Previous columns are available at http://www.cals.ncsu.edu/agcomm/news-center/tag/you-decide
Related audio files are at http://www.cals.ncsu.edu/agcomm/news-center/category/economic-perspective/