Why is S.C. unemployment rate so high?
COLUMBIA — South Carolina's workers have fared well historically when compared with the nation's jobless rate, bolstered by the strength of its economic diversity. But this time something is different, and state experts aren't sure why.
War of words
A proposed Memorandum of Agreement between the governor's office, the SC Employment Security Commission and the SC Department of Commerce
The S.C. Employment Security Commission's response to the governor's request for data sharing and an independent audit
A collection of letters dating back to December of 2007 regarding requests for unemployment information and related legislative action
The state's 8.4 percent unemployment rate ranks third highest in the United States and is projected to reach a staggering 14 percent, a placement that left College of Charleston economist Frank Hefner and a team of his peers stumped.
"When you see things like that, you wonder what changed," Hefner said Monday. Also on Monday, Gov. Mark Sanford indicated that he would sign a loan to cover benefits for the unemployed if the Employment Security Commission was willing to meet certain conditions.
Jobless rate worst in quarter-century, published 12/20/08
Money for benefits expected to run out by Jan. 1 unless Sanford requests federal aid, published 12/24/08
Hefner said that unlike certain places synonymous with an industry, such as Pittsburgh and steel or Las Vegas and gambling, South Carolina's towns and cities employ workers in a broad base of jobs. Up to 2001, around the time of the state's last economic downturn, that diversity contributed to an unemployment rate lower than the national average.
"It is a curious phenomenon that unemployment has exceeded the national rate," Hefner said. "Unfortunately, the sectors that provide most of the jobs in the state are the hardest hit: construction, tourism and manufacturing."
Looking back 30 years, South Carolina's unemployment rate was rarely worse than the national average. Since 2001, however, a trend is apparent as the state's rate continues to top the national rate, and economists don't know why.
South Carolina's job losses look a lot like national trends. Manufacturing jobs, especially those tied to the automotive trade, suffered a major blow here, the same as elsewhere, Hefner said. Likewise, lumber and forestry products are on a general decline across the country, as is the restaurant industry and tourism whether by travel on the ground or in the skies.
"That explains why it is rising across the country," Hefner said. "Why is it higher in South Carolina? That is a hard one to explain. We don't have any good answers."
Nationally, the unemployment rate is 6.7 percent. South Carolina has 182,900 workers without jobs, which accounts for a rate increase of a full percentage point in the last two months and the highest since 1983. Claims are running about 77,000 to 80,000 a month, Sam McClary, a labor market analyst with the Employment Security Commission, said.
Nearly 12,000 jobs were lost in November, the last month for which data is available.
A high number of jobs have been lost in the construction industry and related professions, as well as the manufacturing sector, which has been declining steadily since the 1970s, McClary said.
Doug Woodward, a professor and research director at the University of South Carolina's Moore School of Business, said one difference during this downturn is that the state is no longer replacing the manufacturing jobs as quickly as it was able to in the 1990s. And manufacturing employs more people on average here than other states, so a hit to that segment of the economy creates more ripples, he said.
A second contributing factor to the state's ranking in unemployment is that unlike Northeastern states, South Carolina has more people migrating here and looking for work, Woodward said.
"When you look at the unemployment rate, it's not just how many people were laid off or fired, it's also how many people were looking for a job," he said.
S.C. job losses by the numbers
The Employment Security Commission breaks down the number of jobs lost per category. Here is a look at where jobs were lost for November, the last month for which data is available:
-- Construction, down 2,500 jobs for a total of 22,000 fewer than a year ago.
-- Manufacturing, down 1,200 jobs, 9,500 fewer than a year ago. Manufacturing jobs were lost in 12 of the last 13 months.
-- Trade, transportation, utilities, up 1,100 because of the addition of mostly retail jobs but still down 11,200 from a year ago.
-- Professional and business services, down 4,200, for a total of 9,000 from a year ago. Most of the jobs were temporary help.
-- Leisure and hospitality, down 7,800 for the month and 6,400 for the year. The recent surge is attributed in large part to a decline in restaurant business.
-- Government and schools, up 2,700 for a total increase of 10,200 for the year.