With hiring on hiatus
Work, it’s been said, saves us from three great evils: boredom, vice and need. But for nearly two years, the salvation of gainful employment has eluded a large chunk of North Carolina’s labor force. The jobless rate slid into single digits last summer, but not by much, and hasn’t been below 9.5% since January 2009.
The dip, though welcome, didn’t inspire much joy, because it wasn’t caused by a surge in hiring. The number of people employed statewide in November was essentially the same as the previous November — an increase of just 0.1% — but the labor force, which includes people without jobs seeking one, shrank. “The unemployment rate has moved down simply because workers have stopped looking for work and therefore aren’t counted as unemployed,” says Mike Walden, a professor of economics at N.C. State University. “It’s not because we’ve had great job creation — we’ve had anemic job creation.”
The recession and slow recovery have affected the payrolls of companies large and small. Walden says small companies might be suffering more because credit is so tight. Many of them finance expansions with home-equity loans. “With home equity down, that has inhibited small companies. Larger companies have a larger capital base.”
But don’t expect large companies to drive a big jump in employment anytime soon, says Mark Vitner, Charlotte-based senior economist for Wells Fargo & Co. “The larger employers have made more dramatic cuts, and they’ve found they can still do everything they need to do with a smaller work force, so they’re somewhat reluctant to boost employment all that much.”
Some of North Carolina’s largest private-sector employers have scaled back a bit. Retail giant Wal-Mart is still by far the state’s largest, according to Business North Carolina’s annual ranking of the top 100, but it reported a 1% decrease in the number it employs in the state. Three others in the top 10 did, too. Two stayed the same, and four boosted their employment. As a whole, the top 100 companies on this year’s list did better. Total employment was 681,150 — up 2.8% from last year.
Economists say there’s reason to hope for more jobs in 2011. “The whole economic engine in the nation and state is starting to improve,” Walden says. “We’ve had good numbers for factory output. We’ve seen the service sector expand. We’ve seen consumer spending accelerate somewhat. The Federal Reserve is being very aggressive in pumping money into the economy.”
He anticipates a net job gain of at least 50,000 statewide this year but says that’s not much, considering that the recession stole 300,000. The state faces two big headwinds: The housing market is still soft, and consumers, many of whom lost a lot of wealth the past few years, are still trying to pay down debt and only slowly increasing spending.
Vitner, too, is guardedly optimistic about job growth. Corporate profits have been fairly strong, and confidence grows as the recession fades slowly without a double dip. In surveys, employers are showing increased willingness to add workers, but any rise in hiring probably will also reawaken dormant job hunters and increase the labor force, which would prevent dramatic declines in the unemployment rate. It’s even possible that North Carolina’s jobless rate could climb back into double digits in the first half of this year, Vitner says. “The January numbers are going to be very important to look at because they will incorporate some of the new census data, and it’s possible we could see the unemployment rate is much higher than has been reported.”