U.S. unemployment claims reach a five-year low, more people leave the workforce
The U.S. unemployment rate has dropped since the start of the year, with unemployment claims for benefits decreasing even further at the end of April. At a rate of 7.5%, a five-year low since the December 2008, it may seem as though the economy is improving. But this drop in unemployment may actually be attributed to not-so positive factors.
According to Elon University Professor of Finance Reilly White, this change may indicate that more people are leaving the workforce than ever before, meaning that this seemingly nationwide improvement is actually linked to negative influences.
“There’s good news and there’s bad news,” said White, referencing the seemingly positive statistic, noting the importance of the context in which the statistic exists.
The unemployment rate calculates the ratio of people that are actively seeking work but cannot find it to the overall size of the workforce. According to White, only 63% of the people that could be working are actually seeking jobs or are employed, meaning that the participation rate has gone down. Experts attribute this to people either giving up, or going back to school.
“We think part of the reason so many people appear to have left the workforce is because they are going back to school, simply because they cannot find work,” White said.
Despite a slight decrease, North Carolina’s unemployment rate, which is currently at 9.2%, is still much higher than the national rate. White attributes this to certain characteristics that make the state more susceptible to economic downfalls.
Manufacturing, construction and finance industries tend to suffer the most during a recession, says White. These three industries are dominant in North Carolina, exacerbating the economic downfall and loss of jobs within the state.
Local manufacturers have suffered tremendously, experiencing job cuts due to overseas outsourcing. White says that this type of labor is simply cheaper out of the country, and as long as that still holds true, the local manufacturing industries will continue to suffer.
Since 2009, when there were 3, 979 layoffs made in the first quarter, there have been fewer mass layoffs each year. According to the Department of Labor, employers in the private non-farm sector made 914 mass layoffs in the first quarter of 2013, causing 154, 374 workers to lose their jobs.
Of these 914 mass cuts, 184 were within manufacturing alone, causing 30, 870 manufacture employees to lose their jobs. The Department of Labor attributes this to an insufficient demand for these kinds of jobs. The construction sector experienced similar effects.
White suspects that the North Carolina manufacturing industry will never recover to its full potential.
“North Carolina should incentivize industries that have long term growth potential that will attract workers, including non-volatile industries,” White said.
Elon University professor of management Patrick Bell cautions against taking a singular statistic as a sign of overall improvement. He says that by isolating statistics from critical yet complicated context, false hope is given.
Ernest Young, a recent graduate who was employed, laid off, and hired a second time within the past year, believes that the economy is getting better, even if it is a slow process.
“The North Carolina unemployment rate is a bit higher than the rest of the nation, rebounding slowly but not as quickly as anyone hopes,” he said, based on his recent experience in the state’s job market.
He attributes his recent success to the resources Elon University provided him, crediting his education as an important factor in landing a job.
But Bell suggests that the U.S. should work on majorly restructuring its education system. He finds the four-year college institution flawed.
“In this country we’re taught you have to go to college to be successful,” he said. “The long term solution is to fix the education system, to fix this erroneous idea that you have to go to college to be successful and get employed.”
Bell says that many good, respectable and well-paying skill-based jobs are out there, but are often ignored by potentially talented and qualified people who instead feel the need to obtain a “white collar” job.
“Not everybody is cut out for this style of learning or the kind of jobs that college sets you up for,” Bell said. “So when people fail, they feel bad about themselves, but really its society doing them a disservice by saying you have got to get a college education.”
A recent survey conducted among Elon students revealed that 64% of Elon students believe a liberal arts education makes them more competitive in the job market. Only 40% found the current state of the economy to be positive, while 37% found it to be negative and 23% had no opinion.