N.C. jobless rate rises to 10.4 percent

North Carolina's job market grew bleaker during August, with the unemployment rate having its largest one-month increase in nearly 2½ years.

The N.C. Employment Security Commission reported Friday the state's jobless rate rose 0.3 percentage points to 10.4 percent. The rate is at its highest level since 10.5 percent in June 2010.

Analysts expressed concern, considering that the rate typically goes down in August as high school and college students leave the summer workforce and the annual contracts of teachers and support staff are renewed. Teachers and support staff who don't find summer work are listed as unemployed during those months.

The commission reported a net gain of 13,600 government jobs from July to August.

However, the overall number of government jobs is down 6,000 from May and down 14,700 from August 2010.

Lynn Holmes, the commission's chairwoman, said she was encouraged that the state has had a net gain of 31,600 private-sector jobs since January.

However, the number of government jobs is down 11,000 in the same time.

Economists and political analysts are paying close attention to the state government workforce levels, considering that many agencies had to cut jobs because of reduced funding from the General Assembly for the 2011-12 budget year.

For example, Winston-Salem/Forsyth County Schools eliminated 205 jobs, including 120 teaching positions, for the 2011-21 school year as a direct result of the state budget cuts.

"These unemployment figures are consistent with what we've seen in terms of public-sector layoffs in state government, the UNC system and local public schools," said Edwin McLenaghan, an analyst with the N.C. Justice Center. "It seems unlikely that most of the lost jobs in state and local government would not be due to state budget cuts."

The commission reported a net gain of 2,900 private-sector jobs, including 3,900 in professional and business services and 2,500 in education and health services.

Those increases, however, were offset by the loss of 3,600 jobs in the trade, transportation and utilities sector and 1,200 in manufacturing.

The state's labor force declined by 2,777 to just under 4.5 million. But the number of employed fell by 14,524 to 4.03 million, while the number listed as unemployed rose by 11,747 to 468,140.

The traditional jobless rate does not include several categories of people, such as those who have stopped looking for work, are underemployed for their skills, are able to work full time but can get only part-time work, are receiving severance packages after the elimination of their jobs, or have exhausted their state and federal unemployment benefits.

A rate compiled by the U.S. Bureau of Labor Statistics — the U6 index — includes those people. The latest update for North Carolina found 17.5 percent of adults were without jobs as of June 30 compared with 16.3 percent nationally.

"Storm winds tossed around North Carolina's labor market in August," said John Quinterno, a principal with a Chapel Hill research firm specializing in economic and social policy.

"The labor force contracted, the number of people with a job fell, the unemployment rate reached its highest level in over a year, and the share of adults with a job fell to a 35-year low (of 55.3 percent).

"There exist few signs that any kind of recovery is under way, and unless public leaders act aggressively, conditions will continue to deteriorate."

The Economic Policy Institute, a liberal-leaning think tank in Washington, lists North Carolina among the states whose economy appears "to be headed in the wrong direction." Chief among the evidence behind its claim is that North Carolina has lost 289,300 jobs, or 6.9 percent of its payroll base, since December 2007.

"Too many states are seeing the harmful effects of meeting revenue shortfalls by cutting budgets," the think tank said. "Recently unemployed teachers, police officers and firefighters aren't able to contribute to a sound economic recovery."