Manufacturing and unemployment

Date posted: September 12, 2013

Manufacturing jobs have been declining in both the nation and North Carolina for several decades. Yet as recently as 2007, both the nation and our state had unemployment rates under 5 percent.  How is that achieved with such an erosion of our manufacturing base? N.C. State University economist Mike Walden responds.

“In two words, the housing boom. There’s some new research that’s been done by economists. I think it’s great research that goes back and looks at changes in manufacturing employment. And we have seen a downward trend in manufacturing employment, and looked at where do those workers go. Or why didn’t, for example, when manufacturing employment was going down so much in the 2000s decade, why didn’t we have unemployment near double digits like we do now?

“And the answer is that in much of the 2000s decade, especially the early part, we had a housing boom. And so we had big jumps in construction employment and employment in businesses that feed into construction. And so the notion is that a lot of those workers that were let go by factories either directly or indirectly were sopped up, if you will, employed in areas related to the housing boom.

“In the last four years, we’ve not had a housing boom. We’ve had a housing crash, and even though the housing market has begun to recover, we’ve not seen that revival in construction and construction-related employment.

“So, that’s one of the key answers. So looking forward, if we do start to see construction jobs come back, and we are seeing a rebound in the housing market, then that should be good news. That should push our unemployment rate down very significantly.”

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