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Jobless rate goes up in Triad

Numbers for May point to rocky economic recovery, professor says

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Special Report: Financial Meltdown

By Richard Craver | Journal Reporter

Published: June 27, 2009

A sharp increase in the Triad's jobless rate last month may have squashed recent hopes for a sustainable economic recovery.

After the region's unemployment rate fell slightly in March and April, it rose 0.7 percentage points to 11.7 percent in May, the N.C. Employment Security Commission reported yesterday.

It is the second time this year that the rate has surpassed at least a 41-year high. It was at 11.5 percent in February. The commission is able to track the Triad's jobless rate only back to 1968, spokesman Larry Parker said.

The rate is likely to go even higher during the summer as college and high-school students and teachers struggle to find seasonal work.

Todd Cherry, an economics professor at Appalachian State University, said that the May rate increase is more evidence that the economic recovery "will likely be slower and more uneven than previous recoveries."

"This will show up in the data, particularly in unemployment rates since you have participation and joblessness factors playing a role."

For example, there were 5,314 more Triad residents considered unemployed in May compared with April. There also 7,534 fewer residents listed as employed.

"This doesn't mean we haven't reached a bottom or haven't begun a turnaround," Cherry said. "It just means it will not be a straight path to a recovery."

The jobless rate for the Winston-Salem metropolitan statistical area rose to 10.5 percent from 9.7 percent in April. The Winston-Salem MSA is made up of Davie, Forsyth, Stokes and Yadkin counties.

The rate in Forsyth County increased to 10 percent from 9.2 percent in April.

Officials said that the recent dip in the unemployment rates could have encouraged some people who had dropped out of the job market to re-enter in May. People who are not actively searching for work are left out of the employment data.

Some economists say that the jobless rate could be as much as 3 percentage points higher if all of the people unaccounted for in the unemployment rate were included -- stay-at-home spouses, retirees, full-time students, people attached to their former employer through severance packages, people without jobs who have moved into the state and the underemployed.

"This recession has left no community unscathed," says John Quinterno, a principal at South by North Strategies, Ltd., a research firm focused on economic and social policy. "North Carolinians are grappling with a horrendous job market."

Quinterno said that the state's metro areas are being affected at a deeper level than in previous economic downturns.

"Traditionally, North Carolina's largest metros have been the state's engines of job growth," he said. "Those engines now are sputtering badly."

The jobless rate for Raleigh was 8.8 percent in May, up 0.6 percentage points. The rate in Charlotte also was up 0.6 percentage points, to 12.7 percent.

"Little evidence suggests that the labor market has reached a turning point," Quinterno said. "Even when conditions level off, the forces that typically lead the economy out of a recession -- consumer spending and residential real-estate investment -- likely will be subdued, and job creation will be sluggish."

Davie County had the largest increase in the Triad and Northwest North Carolina during the month, going up 1.4 percentage points to 12.7 percent. Rockingham County had the highest rate at 14.3 percent, up one percentage point.

The only county to have a decrease was Ashe County, down 0.2 percentage points to 12.4 percent.

Despite the rate increase, the Winston-Salem MSA had a net gain of 100 jobs during May, according to the commission. Helping make that jump were net gains of 200 jobs in government and in educational and health services. On the other hand, job losses were recorded in the trade, transportation and utilities sector, and in professional and business services.

"There is no end in sight for North Carolina's struggling working families," said Elaine Mejia, the director of the N.C. Budget & Tax Center. "Families and communities across the state will confront the hardships associated with a weak labor market well into the foreseeable future."

■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.