New Study Shows Positive Impacts From NC’s Unemployment Reforms

A study released last week by the University of Pennsylvania economics department examines North Carolina’s labor market trends in light of the unemployment benefit changes that went into effect last summer.

The study, based on official labor market data, presents some interesting findings:

• Contrary to what critics continue to claim, the drop in the unemployment rate in NC after the UI reform is not due to people dropping out of the labor force. Indeed, the data in Table 1 from the study shows that the labor force participation rate increased from  71.0 percent in June 2013 (the last month before the UI benefit changes) to 72.7 percent in November. The study describes this as “a strong increase in the labor force” since the UI changes.
  • A different data set examined in the study does show a decrease in labor force participation rate since the UI reform; however the rate of decline is slower after the UI reforms than in the same time period prior to reform. The study’s authors were unable to discern an explanation for the discrepancy in labor force participation data between data sets.
• Both the household survey and establishment survey (the two primary sources of labor market data) show “A substantial increase in the employment level and in the share of population that is employed” since the UI reform. These figures are seasonally adjusted to accommodate for seasonal fluctuations in the labor market (holiday retail jobs, back to school, etc.)
• The study also addresses the question of what kind of jobs are being created and accepted since the UI reform: “Are the new jobs created in NC somehow inferior? We see no evidence for that in the data on hours, employment and wages.”
• The study also compares NC’s labor market improvements relative to surrounding states and finds: “The evidence in the figures suggests that North Carolina stands out among its neighbors in the improvement in its labor market performance since its unemployment insurance system was reformed.”