The July jobless rate for North Carolina, released on August 18, show that unemployment numbers decreased by 0.1 of a percentage point from June’s revised rate to 4.1 percent.
The national rate decreased 0.1 of a percentage point to 4.3 percent.
The state unemployment last fell that low in November 2000.
Some economists consider an unemployment rate between 4 and 5 percent to reflect what is referred to as “full employment.”
Simply stated, this is an environment most economists define as one in which all who are willing and able to work are doing so, some add, ‘working at prevailing wages” to that definition.
Michael Walden, professor of economics at NC State University said, “You always have to remember there are two separate job surveys that come out. One is where the unemployment rate is calculated, and the other counts payroll jobs. The unemployment rate of 4.1 percent looks good on the surface, but if you look at the details it was totally due to a reduction in the labor force.”
According to the household survey, 7,005 North Carolinians left the work force in July.
“If you look at the payroll survey, we had a very robust increase in jobs,” Walden said. “I put more weight on the payroll survey. It’s a broader sample. It’s a much deeper sample. It’s not uncommon for these two surveys to go in different directions. The payroll survey tends to bear out more in the long run, so based on that, I’d say it’s a robust report.”
There was a net gain of 8,800 jobs in July according to the payroll survey.
Walden said, “The traditional definition of full employment means you can’t push the unemployment rate any lower without sparking higher inflation. I don’t think we’re there yet.”
There are a number of people who have left the labor market because they were unable to find employment. Many economists see this as a growing gap between those in need of jobs and the skills necessary to obtain those jobs. On the flip side, employers have lamented that they are finding it challenging to fill certain jobs.
The U.S. Bureau of Labor Statistics compiles a combination of scenarios to compile what they call the U6 index.
- Discouraged workers: Persons who are not in the labor force, want and are available for work, and had looked for a job sometime in the prior 12 months. They are not counted as unemployed because they had not searched for work in the prior 4 weeks, for the specific reason that they believed no jobs were available for them.
- Marginally attached: A group that includes discouraged workers. The criteria for the marginally attached are the same as for discouraged workers, with the exception that any reason could have been cited for the lack of job search in the prior 4 weeks.
- Persons employed part-time for economic reasons: Those working less than 35 hours per week who want to work full-time, are available to do so, and gave an economic reason (their hours had been cut back or they were unable to find a full-time job) for working part-time. These individuals are sometimes referred to as involuntary part-time workers.
In North Carolina, the figure for U6 from the end of the third quarter in 2016 to the end of the second quarter in 2017 was 9 percent. Nationally the figure was 9.2 percent.
Lawmakers may look at July’s report and see good news in the payroll report in that jobs are being added, however the number of people giving up looking for a job, or who are not able to find jobs they are qualified for, may be cause for concern.