Overview of South Carolina’s Labor Markets, February 2010 Data

FROM Dr. Don Schunk, Research Economist, Center for Economic and Community Development
E. Craig Wall Sr. College of Business Administration, Coastal Carolina University
For additional information, contact: Dr. Don Schunk, Research Economist, dschunk@coastal.edu (843) 655-0995

February 2010 data on employment and unemployment for South Carolina were released March 26th by the South Carolina
Employment Security Commission and the U.S. Bureau of Labor Statistics.

Highlights from February 2010 Data:

• South Carolina’s unemployment rate during February was unchanged from a revised 12.5% in January.
Similarly, the national unemployment rate held steady at 9.7% during January and February. These recent readings
are consistent with labor markets beginning to show some stability. For example, the total number of initial jobless claims filed in South Carolina between January and mid-March this year was about 77,000, roughly 40% below the 127,500 claims filed during the same period in 2009.
As shown in the accompanying graph, seasonally-adjusted initial claims in South Carolina peaked in March 2009 and have been generally falling since, signaling a slowing in the pace of layoffs and indicating that our labor markets are approaching stability. However, further increases in the
unemployment rate are still possible as previously discouraged workers begin to return to the labor force. Over the last year, I have tried to bring attention to broader measures of both unemployment and underemployment. For the U.S., the Bureau of Labor Statistics estimates that this broader measure (known as U6) was 16.8% in February. I am estimating that the comparable South Carolina measure of U6 was about 20.6% in February.

• Total employment is down about 1.3% between February 2009 and February 2010. For all of 2009, total employment statewide fell by 5.5%. While job losses have slowed, we continue to wait for new hiring to begin. The economy continues to be characterized by high levels of excess capacity – in housing, commercial and office space, industrial production, and retail activity. This excess capacity suggests that the economy can begin to grow -- and it is -- but without the need for new construction, expansions, or substantial hiring. Perhaps even more troubling, however, is that even if South Carolina began to see job growth return immediately at historically normal
rates of growth, it could be 2015 before we returned to the level of employment reached in early 2008. This is almost certainly too optimistic: just over one-third of all jobs created in South Carolina between 2002 and 2007 were in construction and other housing-related sectors, retail trade, and local government. These sectors are not likely to produce large numbers of jobs in the coming years. This suggests that it could take even longer for the state’s economy to recover all of the jobs lost during this recession.

Overall, this month’s report is the best we’ve seen since the recession began. The state’s jobless rate held steady even with some growth in the labor force. An economic recovery is underway, but significant challenges remain. State and local governments in South Carolina have yet to feel the full brunt of the budget crisis, and a significant portion of households continue to directly feel the pain of the recession. A recovery is forming, but I expect it to remain fragile for an extended period