about this current recession

Most people know what a recession is-a considerable period of time during which the country's economy slows down significantly. And, heaven knows a good portion of North Carolina's more than eight million citizens currently are experiencing the effects of such a slowdown in the forms of growing unemployment, a slump in personal income, and an unstable stock market.

Many people are sensing that there is something different about this recession, but are having difficulty pinpointing what it is. After all, most of us remember the 1990-91 recession and, prior to that, some or all of us experienced the aftershocks of the other five recessions that have occurred since 1950.

What makes this recession so puzzling, however, is its lingering affects over the economy. Although the most recent recession began in March 2001 and more than likely ended in late 2001 or early 2002, the unemployment rate continued to remain high through 2002, resulting in a jobless recovery. In fact, our state is still in a recession-though not a textbook-defined one.

The same thing occurred with the 1990-91 recession. It was officially over in eight months, but the unemployment rate continued to rise and remained high through 1993. In fact, the national unemployment rate remained above six percent until August 1994. Nevertheless, there are differences between this recession and the one of the early '90s-especially in North Carolina.

For one, the industry sectors affected have been different. Construction employment did not decline much in this recession, when compared with 1990-91, because of the lower interest rates enacted by the Federal Reserve Board, which kept home building high. Manufacturing, however, showed a sharper decline than in the previous recession mainly due to increased international competition. During both recessions, employment in services increased, but the increase has not been as great during this recession.

Another difference is in the behavior of the labor markets. Relative non-agricultural employment declined much more during this recession. Most notable is that employment levels did not rebound in the second year after the recession began, as was the case following the 1990-91 recession. In fact, relative employment continued falling in the second year of this recession to three percent below the employment level at the beginning of the recession.

Once a recession ends, labor markets must work efficiently to restore full employment in the economy. Displaced workers must be recalled to their previous employer or find new careers, if they have been permanently displaced.

Companies must create jobs at wages that unemployed workers are willing to accept. And, workers must often be willing to accept lower-paying jobs or spend a lengthy period of time retraining for a higher-paying occupation.

The North Carolina Employment Security Commission has been focused throughout the recovery of this recession on making sure displaced workers, if eligible, are receiving unemployment insurance benefits, while working with employers to find jobs for these workers.

However, employers must be willing to increase jobs when their production increases, rather than defer hiring. Only when these measures are undertaken will North Carolinians begin the see the true recovery they anxiously have been awaiting.

(Harry Payne Jr. is chairman of the North Carolina Employment Security Commission.)