This post appears here courtesy of the John Locke Foundation
. The author of this post is Paige Terryberry
North Carolina's unemployment rate increased for the second consecutive month in September according to the latest release from the North Carolina Department of Commerce. The state's rate rose 0.1 percentage point to 3.6%, surpassing the national average of 3.5%. The last two months represent the first increases in the unemployment rate in North Carolina since April 2020, when the unemployment rate jumped to 14.2%.
Nationally, the unemployment rate decreased 0.2% in September. Even so, labor force participation fell, a sign that unemployment may be shrinking only as people leave the labor force entirely.
In North Carolina, the number of people employed decreased by 760 over the month, while the number of unemployed grew by 4,699.
The state's seasonally adjusted labor force participation rate (the number of employed and unemployed looking for work divided against the state's noninstitutionalized civilian population above age 16) has increased steadily since December 2021. September's rate, however, remained unchanged from July and August's rate of 60.6%. Before the pandemic, the rate was 61.3% in February 2020.
If the labor force participation were at pre-pandemic levels, North Carolina would have about 59,237 more people in the labor force.
Moreover, inflation continues to stretch families' budgets as it surpasses any wage gains. In North Carolina, according to the most recent data, wages increased 0.07% over the month (not seasonally adjusted) from $1,033.18 to $1,033.91.
Over the past year, average private weekly wages are up 4.89% in the state. Even so, inflation overtakes these wage gains, causing real wages to fall over the past year. At an annualized rate of 8.2%, inflation is a tax on all Americans, but low- and middle-class households are most harmed. Savings, too, are devalued. Families struggling to save for the future find their savings are worth less and less over time.
To make matters worse, average work hours in North Carolina have steadily decreased. Average private work hours per week decreased 0.29% over the month and 1.45% over the year. Struggling businesses are cutting back on work hours.
Following months of recovery, the economy is stalling. Unemployment continues to increase, and the labor force is not growing. Businesses are struggling to hire workers and are forced to cut work hours, while wage growth is not keeping up with inflation.
High prices and interest rates threaten future growth. The forthcoming third-quarter GDP estimate will be a telltale indicator of what comes next.