The unemployment rate dropped significantly in November from 8 to 7.4 percent. The rate has fallen 2 percentage points in the past year and is the lowest it’s been since 2008. But that’s not all cause for celebration.
The labor force decreased by about 8,100. Allan Freyer, an analyst with the N.C. Budget and Tax Center, says the rate dropped so much because many people just became discouraged and stopped looking for work.
“That’s not the way we want to reduce the unemployment rate. We want to reduce the unemployment rate by folks actually moving off the unemployed rolls and into jobs,” says Freyer.
Mark Vitner, an economist at Well Fargo, says some of that contraction in the labor force has to do with the reduction in unemployment benefits. He says that’s forced some people to take lower paying jobs and others to stop looking for work. But Vitner is still optimistic.
“Yes, that’s going on and that’s why we’re seeing this sharp drop in the unemployment rate, but there’s also some genuine improvement taking place out there,” says Vitner. “We expect that genuine improvement to actually gain momentum as we go into the new year.”
North Carolina saw the largest job gains in the business-professional and trade-transportation-utilities sectors. The biggest losses were in education-health services and manufacturing.
