News: CJ Exclusives

Beware Budget Bashers Misusing N.C. Unemployment Data

Raw numbers tell a different story than the left-leaning spin suggests

RALEIGH — As North Carolina’s unemployment rate climbs above 10 percent for the first time in 10 months, officials and pundits should be careful about misusing the numbers to score political points. That’s the assessment from John Locke Foundation President John Hood.

“Even before the N.C. Employment Security Commission released numbers showing 10.1 percent unemployment for North Carolina in July, Gov. Beverly Perdue was pointing the finger at the ‘new political leadership’ in the General Assembly,” Hood said. “It’s bad enough that Perdue appears to have had access to unemployment data before it was made available to everyone else. What’s worse is that she seems to be drawing hasty conclusions from inconclusive numbers. Perdue is using the data to bash the Republican budget she vetoed this summer.”

The N.C. Employment Security Commission’s latest report lists the state’s unemployment rate at 10.1 percent for July, up two-tenths of a percentage point from June’s rate of 9.9 percent. It’s the second straight month that the official unemployment rate has increased and the first time the rate has reached 10 percent or more since September 2010. North Carolina’s unemployment is a full percentage point higher than the national rate of 9.1 percent.

“The ESC touts private-sector job growth of 6,900 jobs in the past month, but contends that state government jobs dropped by 300 and local government jobs by 11,800,” Hood said. “But the numbers are not as clear-cut as the government press release suggests.”

Seasonal adjustments seem to cause some confusion, Hood said. “It makes sense that the Employment Security Commission attempts to use adjustments to help people make sense of job losses and job gains that happen at the same time every year, regardless of economic circumstances,” he said. “It’s unclear how those adjustments translate into impacts on jobs of real-live people.”

For instance, the ESC used seasonal adjustments in July 2010 to show a government-sector job loss of 27,300. In July 2009, the ESC reported that the government sector lost 21,300 jobs. “In July 2011, the ESC reports a seasonally adjusted loss of 11,000 government-sector jobs,” Hood said. “Does that mean the government sector actually fared better this year than in the past two years? I don’t know. Neither does Gov. Perdue.”

Digging into the raw data leads to even more confusion, Hood said. The ESC’s unadjusted data for “Local Government Educational Services” show 132,300 jobs in July, down from 202,300 jobs in June. The same data source shows 129,400 jobs in that sector in July 2010, down from 209,400 jobs in June 2010.

“The raw data suggest North Carolina had more people employed in local government educational services this year than last year, and the drop from June to July was less severe this year compared to 2010,” Hood said. “Perhaps the ESC’s adjustments should tell a different story, but it’s unlikely that Gov. Perdue and her allies know enough about the numbers to make educated statements about the data. Perdue certainly had no way of turning this ESC press release into evidence of the Republican budget causing the sky to fall in North Carolina.”

Observers of all political persuasions should be careful in using this ESC data, Hood said. “While it’s clear that North Carolina’s employment picture is worse than the picture in most other states, with an official unemployment rate a full percentage point higher than the national average, it’s hard to say much more about the numbers without a detailed, expert examination and comparison of data across multiple months and years.”