By Margot C. Lester
When the state released Octoberâ€™s unemployment figures just before Thanksgiving, there was little to give thanks for (see chart at the end of this story). The number of out-of-work North Carolinians inched closer to 7 percent and local figures were essentially unchanged. Unemployment rolls in Orange and Chatham counties decreased a hair, driven primarily by the retail and service sectors hiring temporary workers for the hoped-for holiday crush.
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Orange Co. view
With its largest employer being the State of North Carolina, Orange County has been somewhat insulated from the job losses experienced in neighboring counties.
â€œWe donâ€™t have a lot of non-government business here, so it may seem negligible by comparison,â€ says Bradly Broadwell, director of the countyâ€™s Economic Development Commission. â€œBut whether itâ€™s sizable or not doesnâ€™t matter â€“ everythingâ€™s getting hit.â€
Right now, itâ€™s small businesses that are beginning to trim headcounts or close altogether. But with a state budget shortfall of 5 percent and university and local government hiring freezes and furloughs looking imminent, county unemployment rolls are expected to grow.
â€œWe canâ€™t continue to rely on the university,â€ Broadwell asserts.
Chatham Co. view
In Chatham, things have been worse.
â€œTo date, the highest unemployment figure was 5.9 percent in July, right after Pilgirmâ€™s Pride closed,â€ says Dianne Reid, president of the Chatham County Economic Development Corporation.
But the looming failure of the Big 3 automakers and the massive drop in housing starts will inevitably have an impact on employment here. Companies like Performance Fibers in Moncure, which makes polyester fiber for seat belts and tire cord, and building products manufacturers like Moncure Plywood and Olympic Steel (Siler City) are likely feeling the pinch.
â€œCompanies in these sectors are trying not to lay people off, pulling hours back, but who knows,â€ she says.
Also unknown at this point: the impact on construction jobs as developers consider scaling back plans. According to the U.S. Commerce Department, construction spending dropped 1.2 percent in October, outpacing the 0.9 percent dip analystsâ€¯forecast.
A broader view
Also suffering: the bread and butter of the RTP. Lenovo and IBM have begun laying off workers (about 150 between them so far).
â€œNationally, technology has recorded the highest number of cuts since 2005,â€ says a report from Chicago outplacement firm Challenger Gray & Christmas.
As of October, tech companies had cut 51,500 jobs nationally. Pharmaceuticals fared only slightly better, shedding 36,536 positions in the same period. Pharmaceutical company GlaxoSmithKline, which slashed its sales and R&D head count this year, is expected to cut more jobs when it consolidates its headquarters operations to RTP.
Elsewhere in the region, the global financial crisis is prompting North Carolina-based and other banks to cut positions in branches and operation centers.
â€œThatâ€™s where the storm came ashore â€“ finance, housing construction, banking,â€ says jobs expert and Challenger CEO John Challenger.
And thereâ€™s the retail sector, which hired the fewest number of seasonal works since 1991. Although preliminary Black Friday and Cyber Monday sales figures were slightly better than expected, Challenger expects non-seasonal workers to begin to get pink slips in early 2009 unless holiday sales are unexpectedly brisk.
â€œEvery month this year, weâ€™ve seen negative job creation,â€ Challenger says. â€œNow itâ€™s totaling 1.2 million jobs lost â€“ and over half of those were in the last three months. So it appears to be accelerating.â€
A positive view
But lest you think itâ€™s all death, destruction and pestilence, there are some bright spots on the local employment scene.
â€œI donâ€™t want to use the word â€˜good,â€™ but times like these have proved to be the stimulus that has created viable businesses,â€ Broadwell says. So he wouldnâ€™t be surprised to see new businesses rising from the ashes and creating jobs. â€œVenture and angel capital is still out there. Itâ€™s hard to come by. But if youâ€™re smart with a good idea and business model, thereâ€™s not a bad time to start.â€
Reid also expects that green-collar jobs at â€œinnovative companies that have new products or approachesâ€ will spur employment growth. Examples include Piedmont Biofuels in Pittsboro, a producer and seller of biodiesel and biofuel consultancy, or Siler Cityâ€™s Floorazzo, which developed a sustainable terrazzo tile at less cost than the traditional kind. (The Citizen will explore this sector in an upcoming installment.)
On the horizon
If historical economic trends are right, this yearâ€™s sustained job loss could be the dark before the dawn.
â€œUnemployment is a â€˜lagging indicator,â€™ in that once unemployment is at its peak the economy is usually well into recovery,â€ explains Ed van Wesep, assistant professor of finance at the UNC Kenan-Flagler Business School. â€œWe should expect unemployment to get much higher during this downturn, but realize that this lags the business cycle. When things look their worst — at least according to unemployment figures — the economy may actually be improving.â€
But whether weâ€™re at that critical point or not remains to be seen. And most people are just plain nervous.
â€œHow long will it last? If I could answer this with clarity Iâ€™d be on the transition team,â€ Reid laughs. â€œThereâ€™s not a willingness to concede that we have turned the corner. It doesnâ€™t seem like confidence is being restored with any of the proposed solutions. And with the economy, confidence is so incredibly important.â€
Jobs watch â€” Our monthly look at the latest unemployment data
CHATHAM CO. Total Labor Force Total Unemployed Unemployment Rate
October 2008 33,131 1,760 5.3%
September 2008 33,008 1,811 5.5%
October 2007 32,764 1,208 3.7%
ORANGE CO. Total Labor Force Total Unemployed Unemployment Rate
October 2008 67,969 2,763 4.1%
September 2008 67,714 2,869 4.2%
October 2007 67,661 2,070 3.1%
STATEWIDE Total Labor Force Total Unemployed Unemployment Rate
October 2008 4.5 million 308,496 6.7%
September 2008 4.7 million 300,308 6.6%
October 2007 4.5 million 202,597 4.5%
Source: North Carolina Employment Security Commission