Thursday, July 25, 2013

North Carolina posts its highest increase in continuing unemployment claims in a decade

Did the bottom just fall out of the North Carolina labor market?

Weekly data on unemployment insurance (UI) claims reported by North Carolina to the Employment and Training Administration (ETA) of the U.S. Department of Labor indicate that the number of continuing UI claims in its regular state program skyrocketed 52 percent from 84,699 for the week ending June 29 to 128,739 for the week ending July 6. The increase of 44,040 continuing claims is the largest in North Carolina in more than a decade.

The week covered by the data is the same week that ill-conceived changes in state law led to the elimination of federally-funded extended UI benefits for the state's long-term unemployed. However, claims for those extended benefits are not included in the regular state figures.

Continuing UI claims are seasonal and tend to grow in the weeks right around holidays when unemployed people are less likely to accept work. This is especially true of the Christmas and New Year holidays, which have the highest seasonal spikes, but also true of the July 4 holiday, which has a modest spike. For instance, this year continuing claims increased 10.5 percent in the rest of the country over the same week.

However, changes like North Carolina just reported are exceedingly rare. Data from the ETA go back to 1987. Over that 26-year period, there were only five other weeks in which the number of continuing claims increased more, and all but one of those increases were associated with Christmas or New Years. You have to go back to January 2002 to find a larger increase for the state.

By Occam's razor, the most likely explanation for an unbelievably large change in the UI numbers is that the numbers are indeed unbelievable. The information technology systems for North Carolina's social service agencies have suffered a number of embarrassing setbacks, including problems paying Medicaid claims and problems processing food stamp benefits, so the possibility of a processing glitch can't be ruled out.

As mentioned, this was also the same week as other changes in North Carolina's UI system took effect; something peculiar to those changes could have contributed to an artificial spike.

However, if the numbers are accurate, things just got horribly worse for North Carolina's workers.