Unemployment rate drops in North Carolina, but that’s not necessarily good news

North Carolina’s unemployment rate dropped to 6.5% in August from 8.5% in July, according to a report Friday from the North Carolina Department of Commerce.

That’s the lowest unemployment rate since March, before the pandemic set in, when it was 4.3%.

But not all of those people have returned to work. The decline also reflects a drop in the workforce overall. Between July and August, the seasonally adjusted workforce shrank from 4,897,607 to 4,825,921, a decline of more than 70,000 people, or 1.5%. The unemployment rate only reflects jobless people who are actively looking for work.

The numbers suggest that with so many companies closed due to the pandemic, many jobless North Carolina residents have given up looking for work.

Charles Monteith, an employment lawyer who formerly served as deputy chief counsel at the Division of Employment Security, said the numbers could also reflect that fewer jobless people are applying for unemployment benefits.

Many North Carolina residents waited months to have their claims processed by DES or struggled to navigate the application system. In early June, there was an overall 13% backlog of unresolved claims for state and federal benefits, according to DES, with more than 135,000 people having unresolved claims.

“People give up. Just like people give up and stop looking for work — ‘There’s no jobs out there, I’m just going to give up.’ It’s not hard for people to give up in the middle of a pandemic,” Monteith said in a phone interview with The News & Observer.

He said other jobless people may not be counted in the unemployment tally because they exhausted their benefits or were ineligible for benefits.

John Quinterno, a principal with South by North Strategies, an economic research consulting firm, said the unemployment numbers also don’t capture whether people are working part time or full time, or whether they’ve been furloughed.

“You have workers who are working, but had their hours cut. They might actually be much worse off. Or people who are on furlough — they may count as employed, but over the course of the month they may be much worse off,” he said in a phone interview.

The nationwide unemployment rate was 8.4% in August, down from 10.2% in July, according to the Commerce Department report. The labor force nationwide increased by 0.6%.

In North Carolina, the largest employment increases in August were in the trade, transportation and utilities sector, which gained 7,300 jobs; the professional & business services sector, which gained 4,400 jobs; and the government sector, which gained 4,300 jobs.

The industries that saw the largest decreases were construction, which lost 1,800 jobs; leisure and hospitality services, which lost 1,300; and the information sector, which lost 1,000 jobs.

County unemployment rates for August are scheduled for release on Sept. 30.

Thousands applying for benefits

According to a Friday update from the Division of Employment Security, over 1.25 million people have applied for unemployment benefits in North Carolina since March 15. The state has paid out nearly $8 billion in unemployment benefits.

As of Friday, over half a billion dollars of that total has been paid out through the Lost Wages Assistance program, the new $300-per-week program ordered by President Donald Trump last month when Congress failed to extend a $600-per-week federal supplement that expired at the end of July.

In an update Friday, DES wrote that it has received enough funding through the program to pay six weeks of benefits in August and September to eligible North Carolina residents. According to the update, DES has begun issuing payments for all six weeks. Previously, DES announced that it would pay for four weeks of LWA.

DES wrote that FEMA notified states that funding will not be provided for any additional weeks.

The claims of 2% of applicants are still pending, and 29% have been deemed not eligible for benefits. Benefits have been approved for 69% of claimants.

Thousands of North Carolina residents have continued to apply for unemployment every day. Over 40,000 claims have been filed over the last week.

Low benefits in North Carolina

With the expiration of the federal $600 weekly benefit, North Carolina reclaimed its position as one of the states with the lowest average weekly unemployment benefit.

As of July, the average North Carolinian on unemployment was getting $218.20 per week from state benefits — nearly $100 less than the national average of $306.03.

A new benefit increase of $50 per week, passed by North Carolina legislators earlier this month, will provide some relief to jobless North Carolina residents. That boosts North Carolina’s weekly payments up to one of the highest rates in the Southeast.

That additional amount is available to eligible claimants for every week this year from Sept. 5 to Dec. 26.

Democratic Gov. Roy Cooper had also called on legislators to include an extension of the number of weeks people can receive state unemployment benefits in the bill, but the Republican-led legislature declined to do so.

North Carolina is tied with Florida for fewest number of weeks of benefits. Benefits stop after a maximum of 12 weeks under normal economic conditions. That’s less than half the 26 weeks that most states offer.

This story was originally published September 18, 2020 at 3:50 PM with the headline "Unemployment rate drops in North Carolina, but that’s not necessarily good news."