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A public policy blog from AEI
Last July, North Carolina lost its eligibility for the federal Emergency Unemployment Compensation program. So how has the benefit cut off worked out? Well, the jobless rate went way down, to 6.9% in December, according to new BLS numbers, from 8.8% in June — the month before the cut. Nationally, the jobless rate has fallen to 6.7% from 7.5%.
But why did the jobless rate drop in the Tar Heel State? Sure, state employment rose by 41,000. But that was accompanied by a sharp drop in the labor force participation rate to 61.2% from 62.2%. That full percentage point drop is even larger than the decline nationally of 0.7%. Overall, 52,000 have left the labor force since June. So more have left the labor force that have found employment.
Another way to look at it: if NC labor force participation had only fallen by the national average, just 28,000 would have left the labor force. So to sum up, the state has gained 41,000 employed while 24,000 more folks left the labor than one would expect, at least by looking at the national average. And that’s if you have confidence in all those numbers. As a BLS official told Evan Soltas:
We can say of the seasonally adjusted LAUS data for North Carolina that the approximate thresholds for statistically significant changes (90-percent level) over a 6-month period (using the change from June-December 2013) are as follows: 68,000 for civilian labor force; 61,000 for employment; 32,000 for unemployment; and 0.7 for unemployment rate. So, our official estimates indicate that unemployment (both in terms of the level and rate) in North Carolina has gone down significantly since June, but neither the labor force nor employment level changes were significant.
Now your mileage may vary here, of course, but still at this point I would rather have extended EUC — especially given the unusually high long-term unemployment rate — and combined that with smart UI reforms than just pull off the band-aid — especially given sample sizes and data reliability. As AEI’s Mike Strain has put it:
We should want to keep the long-term unemployed attached to the labor force until the economy picks up, more jobs become available, and they can find work. We should not want today’s long-term unemployed to permanently exit the labor force simply because their UI benefits expire. Why? Because many may end up on government assistance until they reach retirement age. That is worse for them, worse for the economy, and more expensive for the federal government over the long term.
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