What a piece of work is Man
Just one more day to go, and Harry Payne admits he’s a little edgy. Tomorrow he’ll give up his job as chairman of the state Employment Security Commission to Moses Carey, the incoming governor’s appointee. After seven years in office, Payne is looking for work, and the job market hasn’t been this lousy in a long time. His stint at ESC, along with a law degree, two terms as state labor commissioner and a dozen years in the state House of Representatives give him an impressive résumé. But, as he notes, “it is an anxious time, no matter how portable your skills may be in the economy.”
That fear of the unknown grips more North Carolinians than ever before. The number of unemployed statewide rose to 356,794 in November — an all-time high and a 12-month increase of 68%. The seasonally adjusted jobless rate stood at 7.9% — the highest in more than 25 years — and the numbers likely will get worse before they get better. During December, the state trust fund used to pay monthly unemployment claims shrank 47% to $180 million and kept heading south, raising the possibility that ESC might have to borrow money, as counterparts in South Carolina and other states have been forced to do. In early January, when holiday hires are let go and joblessness often rises, a technical glitch and heavy volume of unemployment filings crashed the ESC’s computer server.
The ailing economy hasn’t yet made a big impact on Business North Carolina’s annual list of the state’s top 100 private-sector employers. Of last year’s top 10, only two companies reported declines in their Tar Heel work force this year, but there are signs of trouble ahead. At the top of the list, discount retailer Wal-Mart had a tough Christmas, and thousands of job losses are likely in Charlotte alone as Wells Fargo integrates its recent purchase of Wachovia Corp., which ranked second a year ago. A little farther down the list, Bank of America plans to cut more than 30,000 jobs companywide, though it’s not clear how many will be in North Carolina. Layoffs are expected at IBM.
Mark Vitner, senior economist at Wachovia, thinks his job is safe, though “nothing is absolutely certain.” He figures that the statewide unemployment rate should level off as people quit looking for work and max out at about 9.5% this summer. But the economy’s problems are so deep and broad, he says, that it will take a long time to come down. “Everything is sort of spongy right now,” Payne says. “People are scared and anxious, and because of that, they’re cutting back on spending. And that only exacerbates things.”
In many ways, the state did a good job of recovering from a recession that hit North Carolina harder than most places in 2001 and was heavily concentrated in manufacturing and high-tech, Payne says. The same tricks won’t work this time. More ailing sectors and more ailing states mean fewer healthy companies that North Carolina can poach from somewhere else. “What the state must do this time will be quite hard, and that is to respond to something it doesn’t have complete control over. But it’s a time to realign what we do and how we do it and give some hard thought to the years to come and what will make us competitive.”
In at least one way, the state didn’t recover quickly enough from the last recession, says David Clegg, ESC’s deputy chairman for administration & communications. In September, the unemployment fund had risen more than halfway to ESC’s goal of $1 billion. Then it slipped for a few months before plummeting in December as payments from employers began to dry up.
As with all downturns, this one was born of imbalances — mostly in the housing and financial sectors — during good times. Vitner traces its genesis to the development of personal computers, which made financial modeling faster and cheaper, starting in the early 1980s. “As the cost of crunching numbers came down, we were able to build very sophisticated models at a very low cost that allowed us to score credit and to slice and dice up pools of mortgages and spread the risk around to the point we thought we were minimizing risk. While we might have minimized risk at individual financial institutions, we stacked risk on top of the entire financial system. Now, it’s come down, and the weakest players have been taken out. It’s going to take a long time to fix that.”
Other sectors hit hard in North Carolina include manufacturing, which lost 32,500 jobs November to November; business and professional services, which lost 25,100; and trade, transportation and utilities, down 20,100. Trade includes retail. Among the least affected, educational and health services added 19,800 jobs, and government increased by 4,800. In November, jobless rates reached double digits in two of the state’s 14 metro areas — Rocky Mount and Hickory. Both were hammered by losses in manufacturing last year.
The rate also rose in Raleigh, where Payne’s skills would be in obvious demand. Blessed as it is with government, education and health-care positions, it claimed the second-lowest jobless rate of any metro area. Still, he might not find the right gig right away and could be eligible for some of the benefits his former agency doles out. “Certainly that’s an option I’d have to look at.”