While North Carolina’s unemployment rate has been running higher than the national average, economists agree that the future looks better. According to the Department of Labor’s recent unemployment rate update, North Carolina’s rate has now fallen below 10 percent.
But the unemployment rate is more than just the proportion of those without work. Lee Craig, head of the economics department, said economists calculate unemployment rates by tallying the number of unemployed people who are actively seeking employment, and then dividing by the total number of unemployed and employed people. By calculating the rate this way, lurking variables like children and retired people are taken out of the mix, according to Craig.
One reason that North Carolina’s unemployment rate has remained above the national average is that one major part of our economy has this tendency according to Michael Walden, a Reynolds distinguished professor of economics.
“Manufacturing is a sector that suffers a lot more than other sectors; people buy less material goods or machinery,” Walden said.
Unemployment lags the economy because of the costs of training new workers, so companies refrain from firing workers at the start of a recession and resist hiring new employees at the end of a recession, according to Douglas Pearce, professor of economics.
This is because companies need to see where the economy is going before they hire or lay off anyone.
This raises the question of whether outsourced manufacturing jobs should be brought back to the U.S. The nation may be losing its manufacturing industry as it grows into an innovator. According to Craig, this is not a bad thing.
“If some country is relatively efficient at manufacturing and the other country is better at innovation, the first country should manufacture and the second country should innovate and they should trade,” Craig said.
Walden said he agrees that the U.S. will not revert back to a major manufacturing country. According to Walden, with increased efficiency the manufacturing industry will need less and less jobs. Furthermore, manufacturing jobs offer lower wages than other industries, making it an unviable solution.
Another aspect to consider is the age of an unemployed applicant. If an applicant is 35, an employer is looking at 30 years of work from that individual. However, if an applicant is 55 or more, the employer may not want to hire someone for 10 years or less.
“The employer is also making an investment in the employee, so they may want to hire someone who is going to be working for a longer time,” Pearce said.
Despite the pros and cons to the state’s unemployment rate, older applicants have the possible advantage of having savings to help them through their period of unemployment, whereas a younger applicant may be scraping pennies during this time, according to Craig.
While North Carolina’s unemployment rate is still fairly high, ranking us 47 out of 51 by the Department of Labor, economists debate whether it is necessarily a good representation of the state of the North Carolina economy.
