By James T. Hammond
SCBIZ Daily Staff

COLUMBIA -- Discouraged job-seekers left South Carolina’s labor force in record numbers in September and were not counted in the month’s unemployment figures, artificially depressing the jobless rate to 7.3% from the 15-year high of 7.6% in August, the Employment Security Commission reported Tuesday.

The number of jobs in South Carolina fell 14,400 during the month, the largest September decrease on record, according to commission data.

The September figures do not reflect the impact of the financial crisis that led to congressional authorization of a $700 billion bailout for the nation’s banks.

“There is not a lot to be optimistic about right now,” said Roosevelt T. Halley, executive director of the Commission. “The recent crisis in the financial markets occurred after our survey week in September, so the impact will not be reflected in our figures until the October and November data are released.”

Doug Woodward, an economist at the University of South Carolina’s Moore School of Business, said two to three years of stagnant job growth are likely as the U.S. and state economies work their way out of a recession.

Woodward said seeing discouraged workers is not unusual and the outlook “is not good.”

“We’re about to enter a recession,” he said. “It looks like things fell apart in August. The only question now is the duration and severity of the recession.”

He said lower gas prices, seen below $2.80 a gallon Tuesday in Columbia, are a good sign and might stabilize consumer confidence and help retail sales.

Bruce Yandle, an economist and professor emeritus at Clemson University, noted that the bright spot in the report was in the growing employment along the Interstate 85 corridor.

“There’s something going on out there other than just discouraged workers,” Yandle said. “In some of those counties, the work force actually grew.”

But Yandle said he expects another wave of economic pain to hit the state as the economy absorbs the banking crisis, the freezing of credit and the government’s measures to loosen lending by the banks.

The 10 counties with the highest jobless rates:

County  Sept.  Aug.
Allendale  16.9%  17%
Marion  15%  15.1%
Bamberg  13.6%  13.7%
Marlboro 12.9%  13.7%
Barnwell  12.7%  12.4%
Orangeburg  12.5%  12.6%
Union  11.9%  12.4%
Chester  11.8%  12.6%
Fairfield  11.7% 12.4%
Lancaster  11.7% 12.1%

The counties with the least workplace impact from the shrinking economy were in the industrial, government and academic centers of the state.

The counties with the lowest unemployment rates:

County  Sept.  Aug.
Lexington  5.3% 5.6%
Beaufort  5.3%  5.8%
Charleston  5.7%  6.1%
Greenville  6.0%  6.4%
Jasper  6.2% 6.4%
Dorchester  6.3%  6.4%
Aiken  6.3%  6.9%
Saluda  6.4%  6.6%
Pickens  6.4%  7.2%
Richland  6.7%  7.3% 
Berkeley  6.7%  7.3%

The drop in the unemployment rate, Halley said, is largely attributable to discouraged unemployed job seekers quitting their job searches and leaving the labor force.

“There’s very little positive news regarding the national or state economy right now,” Halley said in a statement released by the Employment Security Commission.

The national economic forces are expected to weigh heavily on South Carolina’s manufacturing-dominated economy.

Yandle predicted in his Oct. 6 newsletter, “I expect the negative growth quarters will yield slow growth for 2008, 2009, with some recovery to higher ground in late 2010,” he said. “By then, housing markets should be reassembled, but the transforming of old to new economies will still be under way.”

He added: “I expect that South Carolina will follow the national pattern but continue to underperform the U.S. economy as seen in unemployment and per capita income growth. This will mean that South Carolina per capita income will continue to fall relative to the nation in the next few years.”

South Carolina’s labor force shrank by nearly 6,000 in September to 2,159,180, while the number of unemployed declined 6,500 to 157,047. The national unemployment rate held steady at 6.1% in September, the commission reported.

The commission said all major industry sectors lost jobs in September, except education and health services (+2,100) and government (+4,900). The gains were the result of state, local, and private schools adding staff for the fall term.

The construction sector, which lost 700 jobs, has declined for 11 consecutive months, the commission said.

In its most recent economic outlook report published in June, economists at the Moore School said the downturn in construction had been much higher than anticipated. Single-family housing permits had 20 consecutive months of year-over-year declines, and the largest declines were observed in the first three months of 2008.

“Construction activity is forecast to rebound in the second quarter of 2009,” the report said. “As a consequence, there is likely to be a loss of 4,400 jobs in the construction sector in 2008, but that loss could be even larger.”

The overall job count, at 1,950,565 in September based on separate data, was nearly 13,000 below the year-ago figure. This marks the second month in a row that the number of jobs in the state has fallen below year-ago levels.