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Q&A with economist John Quinterno on North Carolina unemployment

John Quinterno is an economist and instructor at the UNC School of Government. He recently wrote an article in which he discussed how labor force size has affected unemployment in North Carolina.

Daily Tar Heel staff writer Cole Stanley spoke with Quinterno about his article. 

The Daily Tar Heel: The recently released North Carolina jobs report shows a net gain of 12,000 jobs in the state overall. That sounds like a promising figure — do you think this is cause for optimism that our state is on the path toward economic recovery?

John Quinterno: Well, to be honest I think that 12,000 figure is a little misleading, and I say that for two reasons. One, and this may seem fairly obvious, but a net gain of jobs of course is a good thing, but it’s only part of the picture. It’s just as crucial to look at how many people are leaving the labor force. Adding 12,000 more jobs than we’re subtracting is certainly a good thing, but right now it’s simply not enough to keep up with the pace at which the size of the working age population is growing.

Now, there may be perfectly valid and not quite as economically damaging reasons why we might see people leaving the workforce. They may be pursuing further education, for example. But having some small percentage of the working population leaving the labor market to go to school doesn’t have a large enough impact to account for the type of fallout we’re seeing.

The second reason is the way we actually measure net gains and losses of jobs. So, there are actually two different measures and they get at two very different things. One is "payroll positions." That is the number of jobs on the payroll for firms that are based in North Carolina. The second is the "place of work" measure, which is a count of the number of jobs people are going to each day in North Carolina. The problem arises because if you have a tech company, for example that is based in RTP but hires employees in a lot of different areas, those jobs would be counted if the payroll measure is used, as it is in the N.C. jobs report.

DTH: So, of the jobs we have added in this most recent period, what percentage are high-skill, high-wage jobs?

JQ: The vast majority of the jobs we have added in the state since the recession have been low-wage, low-skill jobs, which has done nothing but exacerbate the situation and make it harder for us to dig our way out of this hole we’re in. The fact that so much of our workforce is being utilized in this way decreases earnings, which in turn decreases spending, which translates to stifled economic growth.

DTH: In terms of public policy as a driver of job growth, do you think that the economic development packages the McCrory administration has rolled out in recent years has had a net positive effect on the North Carolina labor market?

JQ: This is a fairly contentious issue. I have always been very skeptical of economic development incentive packages because they don’t really seem to deliver the ‘bang for your buck’ that is typically promised when they are proposed. At the end of the day, I don’t think many of these incentive packages have benefited the state because they have either brought in businesses which stay in the short-term and collect their check, but leave in the long term, taking jobs with them or they are simply subsidizing market activity which would take place without assistance.

DTH: Did you see any evidence in this most recent report of jobs leaving the state due to the passage of the controversial House Bill 2?

JQ: I don’t think it’s so much that we have lost jobs because of it, as it is we missed out on opportunities to grow the market. So there’s not much evidence of net losses due to firms pulling out over HB2 — although this has happened, it is not a very large number. However, there were a number of firms such as PayPal that had planned on expanding in or moving in to the state, which could have added thousands of jobs, but decided against expansion because of the bill.

DTH: If you were on the governor’s staff, what specific policies would you suggest to him to strengthen North Carolina’s labor market?

JQ: If I were on his staff, I would say that the most important piece is strengthening our labor institutions. We need to raise the minimum wage … we need to reinstate and strengthen workplace benefits like health care and paid leave that many employers no longer provide, and we need to bolster the government provision of unemployment insurance.

Other than that, some key policy areas to look at would be rebuilding our infrastructure and modernizing our transportation so that our businesses can operate more efficiently and we need to take a good, long look at the tax code and see what changes we might be able to make there. We need to ask if the concessions that we are making are really resulting in economic growth.

state@dailytarheel.com

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