S.C. jobless rate declines

South Carolina's unemployment rate dropped to 11.5 percent in August for two reasons, economists said Friday:

First, colleges and local schools opened their doors for the fall semester, adding nearly 16,500 jobs to the economy.

Second, more people dropped out of the work force.

Because of those dropouts, economists did not view the lower unemployment rate as a positive for the economy.

"It's a sign people are becoming increasingly discouraged in their job searches," said Don Schunk, research economist at Coastal Carolina University.

Nationally, the August unemployment rate rose to 9.7 percent. Five other states had higher unemployment numbers than South Carolina.

For the month, 14,300 total jobs were added in the state, the S.C. Employment Security Commission said Friday. The gains in education were offset by the continuing decline in construction and a slump in leisure and hospitality that comes at the end of the tourist season.

Manufacturing jobs were flat for the first time since the recession began in December 2007.

South Carolina's labor force dropped to 2.18 million in August.

The reopening of schools always gives a boost to the state's employment, said Sam McClary, the commission's labor market analyst.

However, the number of jobs added at the start of the 2009-2010 school year was less than the previous year, McClary said.

Most likely, that can be attributed to state budget cuts that forced school districts to lower the number of faculty and staff.

The S.C. Department of Education does not know how many jobs were eliminated this school year, said Jim Foster, the department's spokesman. However, earlier projections estimated that 1,900 positions would be eliminated, he said.

Typically, teachers receive paychecks 12 months of the year. But many school districts in the state do not pay their bus drivers, custodians and other staff during the summer.

School support staff positions account for thousands of jobs across South Carolina. For example, there are more than 5,000 school bus drivers in the state, Foster said.

However, the addition of education-related jobs did not impress economists.

"That's something that happens every single year," Schunk said. "There's nothing noteworthy in that."

Since May, the state's labor force has lost more than 28,000 people, Schunk said. And economists do not know what is happening to those people.

Schunk said anecdotal evidence suggests they are leaving the state to look for work or returning to school.

One day, those people will restart their job searches, he said. And when they do, Schunk predicts the unemployment rate will jump up even though the overall economy might be improving.

"The stage we're in now is where the recession is moving into recovery," he said. "The unemployment rate is going to hold steady and even drop until it hits a plateau. Once the recession turns around, people will re-enter the labor force, driving the numbers back up again."