Last month, Gov. Mike Easley announced that North Carolina had gained 13,400 jobs from April to May. Easley’s role in making the announcement was a noted departure from the standard practice of the state Employment Security Commission releasing the job numbers. “Our efforts to improve the quality of our workforce through our education system, our low cost of doing business, and our targeted capital investments in infrastructure are paying off,” he said last month, without elaborating on the connection.

Easley may not be so eager to continue making the announcements. Revised numbers, now available in an obscure location on the Employment Security Commission’s web site, show the job gain number for May is actually 3,300, or 10,100 less than the governor reported.

The next scheduled release of the job numbers and the unemployment rate for June is on Friday, July 16. To some extent because the May jobs numbers were substantially revised down from the preliminary estimate, the preliminary figures for June show a substantial gain of 35,400 jobs. Many observers may call this good news, but a closer examination of the job categories reveals that 29,600 or 84 percent of the May-to-June gain in North Carolina were government jobs. Employment growth in the private sector seems to have grown relatively slowly during the past two months.

ESC’s director of Labor Market Information, Peter Neenan, told Carolina Journal, “The numbers are estimates and revisions occur frequently. The downward revision in the May job numbers is due to a rise in the use of year-round schools. The year-round school situation is not fully incorporated into the model for the seasonally adjusted series.” He also said the increase in government jobs from May to June is due to the year-round school effect.

The data come from the federal Bureau of Labor Statistics Seasonally Adjusted Monthly Establishment Survey. ESC acts as a partner with the federal government in collecting the information. Monthly gains or losses are computed by simple subtraction. Most experts are cautious about reading too much into monthly changes, and instead look at change over longer periods as a more reliable indicator of employment change.

The unemployment rate is derived from a different survey. The rate for May was 5.3 percent. The June rate is not available to the general public yet, but some insiders will be discussing it today in a private briefing.

Insider information

Easley’s release of the data last month was a departure from long established procedures. Up until last month, the job totals as well as the unemployment rate were released by ESC. The release dates are posted in advance, giving the media and other interested parties a firm date when the data will be available. The release of the statewide data normally occurs on the third Friday of the following month. Easley’s release was done on Thursday June 17, even though ESC had previously declared that the data would be released on Friday, June 18.

An inquiry into the matter by CJ revealed that ESC has been secretly briefing the governor a day or more in advance of releasing the numbers. The practice appears to have started in October 2003. CJ asked ESC for copies of all correspondence that established the new procedure. It was apparently suggested by Peter Neenan at ESC, and developed in conjunction with Dan Gerlach, Senior Policy Advisor to the governor.

Attendees at the monthly briefing include representatives from ESC, the governor’s office, Department of Commerce, and the Office of State Budget and Management.

Since national financial markets and many economic forecasts are affected by the employment data, the national employment numbers are tightly protected until the published release date and time. Only a handful of individuals sworn to secrecy are privy to the information.

Bureau of Labor Statistics Regional Commissioner Janet Rankin, based in Atlanta, said that even the president of the United States cannot comment on the national numbers until one hour after the data have been released to the public. “A person associated with developing the data that is caught releasing it or commenting on it prematurely is subject to fines and jail time,” she said.

On the day prior to the scheduled release date, the president’s Council of Economic Advisors can attend a briefing, but the members are not allowed to comment. When the numbers are released at 8:30 am, no federal employees can comment except the Bureau’s employees. At 9:30 am, any federal employee, including the president, is free to comment. “The procedures are designed to protect the system from political influence,” she said.

North Carolina has no such procedures.

ESC’s Neenan told CJ the governor’s staff would be briefed today (Thursday), and he expected ESC to resume issuing the release of the employment data and unemployment rate on Friday.

Political implications

While state specific data may have less or little effect on financial markets or decisions, the data may affect political decisions. Political candidates may change their ad messages based on how well the economy is perceived to be doing prior to an election, North Carolina State University political science professor Andrew Taylor told CJ. “It is a classic situation of politicians credit claiming and blame avoidance. They announce good news suggesting they are heavily connected to it and distance themselves from bad news,” he said.

He also said that it is a major advantage for an incumbent to have advance economic information. “In a gubernatorial race he can prep the public if the numbers are bad and catch opponents off guard if they are good.”

Carrington is associate publisher of Carolina Journal.