South By North Strategies, Ltd.

CHAPEL HILL, NC (June 19, 2020) – In May, employers in North Carolina collectively added 67,100 more payroll jobs than they cut (+1.7 percent), with net gains in the private sector offset by net losses in the public sector. The May household survey, meanwhile, recorded a large increase in the number of unemployed North Carolinians. The state unemployment rate was 12.9 percent, which was tied with the April 2020 rate for the highest logged in any month since 1976.

These findings come from new data released today by the Labor and Economic Analysis Division of the North Carolina Department of Commerce.

“The COVID-19 crisis has devastated North Carolina’s labor market,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Since February, employers collectively have eliminated 548,700 payroll jobs, with 89 percent of the losses originating in the private sector. Prior to the COVID-19 crisis, the last time North Carolina had so few payroll jobs was in August 2013.”

In May 2020, employers added 67,100 more payroll jobs than they cut as shuttered firms re-opened following the relaxation of various state and local stay-at-home orders. For instance, the number of payroll positions tied to food service and drinking establishments rose by 40,100 (+19.1 percent).

Collectively, private-sector employers added 102,700 more payroll jobs than they cut in May (+3.1 percent). Within private industry, the leisure and hospitality sector netted the most positions (+44,800, +16.8 percent), followed by the trade, transportation & utilities sector (+17,200, + 2.2 percent) and the education and health services sector (+16,700, +3 percent). The net increase in that sector was due to the re-opening of establishments offering ambulatory health care services.

More than a third of the private-sector gain, however, was erased by net reductions by public-sector employers, which collectively cut 35,600 more jobs than they added (-5 percent). Public-sector losses were driven overwhelmingly by net cuts in state and local educational employment.

“The COVID-19 crisis ended to the economic expansion that began in North Carolina in early 2010,” observed Quinterno. “Since February, the state has given back about 70 percent of the net job growth logged during the decade-long expansion. For further perspective, consider how in May 2020, North Carolina had just 150,400 more jobs than it did in May 2000.”

The May household survey offered further evidence of a labor market in crisis. Last month, the unemployment rate reached 12.9 percent, which was the same rate posted in April following data revisions. A monthly rate of 12.9 percent is the highest rate recorded in North Carolina in the history of the modern data series, which dates to 1976. Last month, 621,713 North Carolinians were unemployed, which also was the highest figure logged in any month since 1976.  

“Since February, the number of unemployed North Carolinians has more than tripled, rising to 621,713 from 182,606,” noted Quinterno. “Over that period, the statewide unemployment rate also has more than tripled, jumping to 12.9 percent from 3.6 percent. For various technical reasons, that estimate is likely an undercount of the true extent of joblessness in the state.”

Also, since February, an estimated 293,000 people have exited the state’s labor force entirely, thereby reducing its size to 4.8 million from 5.1 million. In May, the share of the working-age population even participating in the labor force was 57.9 percent. While up from April, the state’s labor force participation rate is hovering near the lowest value posted since 1976.

Moreover, the number of employed persons has fallen to 4.2 million from 4.9 million since February. In May, only 50.4 percent of working-age North Carolinians were employed, up from April’s rate of 49.4 percent, which was the lowest monthly value logged since 1976.

“The actions necessary to fight the novel coronavirus and protect public health have caused chaos in North Carolina’s labor market,” reflected Quinterno. “While job growth ticked up in May following the relaxation of various state and local stay-at-home orders, record numbers of people in North Carolina are jobless and are unlikely to return to work anytime soon. In fact, the numbers likely will worsen over the summer if various forms of federal aid like enhanced unemployment insurance and the Paycheck Protection program expire and if public-sector employers slash their payrolls and spending in response to collapsing tax revenues.”

“The virus is what is driving the negative impacts on households and businesses,” warned Quinterno. “State and federal policymakers must prepare for a prolonged crisis and deliver long-term aid to individual households and firms at a scale and for a duration longer than envisioned when Congress passed the CARES Act. Action is needed sooner rather than later.”