Missing the Real N.C. Unemployment Story | Eastern North Carolina Now

    Publisher's note: The author of this post is Dr. Roy Cordato, who is vice president for research and resident scholar for the Carolina Journal, John Hood Publisher.

    The title of a recent Raleigh News and Observer article - "Economy in North Carolina is a Mixed Bag" - gives away the story's conclusion. Of course, this conclusion is a rather trivial one that probably could be reached for every state in the union at any period in history.

    The N&O points out that the state's economy has been growing faster than the nation as a whole. North Carolina also has a below-national-average unemployment rate. But the article also notes, correctly, that growth in the state has been uneven, emphasizing the well-known rural/urban divide, with many rural counties not doing as well as more urban counties (although the N&O did point out that the unemployment rate has fallen in all 100 counties).

    One data point used to emphasize the fact that everything isn't completely rosy is the combined rate of unemployment and underemployment, or what the federal Bureau of Labor Statistics calls the U6 rate. Officially, there are six different ways of measuring unemployment. After pointing out that North Carolina's unemployment rate (officially called the U3 rate) is better than the national average, the News and Observer states that "A more expansive measure of unemployment, which counts all adults who aren't working or who are underemployed, shows North Carolina at 11 percent. The national average is 10 percent."

    While the N&O article is unclear about the time frame the authors are referring to, a cursory look at the data leads me to believe that it is referring to the U6 rate for 2015, when North Carolina's average rate for the year was 11.3 percent. I am going to update this data and, instead of making a comparison between North Carolina and the nation at a point in time, take a look at what has happened with this comparison over time.

    If we look at a North Carolina-versus-the-nation comparison of the the U6 unemployment rate from the beginning of 2013, just as Gov. Pat McCrory took office and before major tax and regulatory reforms were enacted later that year, to the middle of 2016 (the most recent annualized data that can be used for a direct federal/state comparison), we find that the North Carolina rate has shown much greater improvement than has the national rate.

    At the beginning of this time period, specifically the 12-month period from the third quarter of 2012 to the third quarter of 2013, the national rate was 14.3 percent, while North Carolina's rate was 15.6 percent. Between this 2012-13 time frame and the same period in 2015-16, the U6 rate declined both nationally and in North Carolina. But the decline for North Carolina significantly outpaced the decline at the national level.

    While, as of the end of the second quarter of 2016, the national rate had fallen to 9.9 percent, or 4.4 percentage points, North Carolina's rate had fallen to 10.2 percent, or 5.4 percentage points. Put in percentage terms, North Carolina experienced a 34.6 percent decline in its U6 rate while the nation as a whole saw a 30.76 percent decline.

    Before the growth-enhancing tax and regulatory reforms of the last three years, the gap between the national and North Carolina U6 rate was 1.3 percentage points. By July 1 of this year - and after most of these reforms had been fully implemented - this gap fell to a mere 0.3 percentage points.

    Clearly, the News and Observer was using the U6 unemployment rate to show what they believed was part of the downside of what some have called North Carolina's economic comeback, i.e., that it has really been a "mixed bag." But, in fact, when looked at over time and in the proper context, this particular statistic is another clear example of the state's recent policy success story.