Joblessness could linger in WNC, nation

by Jon Ostendorff in the Asheville Citizen-Times published March 24, 2009 12:15 am

CULLOWHEE – Unemployment rates nearly twice the national average could linger for years after the end of the recession in Western North Carolina, an economist says. That's because businesses shedding workers right now won't add them back quickly even when the market turns around, said Robert Mulligan, a professor of macroeconomics at Western Carolina University. “They get very spooked,” he said. “They are reluctant to hire back workers because their expectation is if we hire more workers, we might have to end up laying them off, so let's make sure that the economy has really recovered.” Mulligan predicts an end to the recession by the end of this year. But labor markets typically lag two years behind an economic recovery, he said.

Some of WNC's most rural counties have jobless rates that are double the national unemployment average, according to new statewide figures. In McDowell County, cuts at manufacturing plants have put the rate at 15.5 percent, among the highest in the state. Marilyn Williams, director of the local unemployment office there, said she's had hundreds of applicants show up for a handful of jobs at medical equipment-maker Baxter Healthcare. “I think some places were hit harder earlier, and McDowell County stayed sort of strong,” she said. “But everything has kind of caught up now.” The county's other two big employers are Ethan Allen Furniture and the hospital. But those businesses can't absorb the county's 3,270 unemployed workers.

Unemployment rates rose from December in every county in the state, but WNC was hit especially hard. Five of the eight counties with the highest unemployment rates are in the mountains. The rate in 12 of 18 WNC counties hit double figures. Buncombe County's rate was 8.2 percent — up from 4.2 percent in January 2008 and from 6.3 percent in December. The national unemployment rate in February was 8.1 percent, according to the national Bureau of Labor Statistics. Officials with the N.C. Employment Security Commission, which administers unemployment benefits and tracks the jobless rate, said more than half of the claims are temporary layoffs where employers are filing on behalf of workers. “I think in some ways that signifies that the employer doesn't want to lose those folks, that in need of a callback, they want to have them as close as possible,” said agency spokesman Larry Parker. “So they don't cut them. They just lay them off and hope they are going to call them back sooner rather than later.”

The sectors cutting the most jobs are manufacturing, construction and retail trade, according to state statistics. Parker said the higher rates are the results of cuts businesses announced late last year. Mulligan, the WCU economist, says he expects the national unemployment rate to level off this year. He said it could reach 9 percent but doubted it would go much higher. And he expects to see unemployed workers, especially those in construction, moving away from WNC to find jobs — a trend that could make matters worse. “That is going to hurt retail because that (sector) can't relocate as easily,” he said.