South By North Strategies, Ltd.

CHAPEL HILL, NC (July 17, 2020) – In June, employers in North Carolina collectively added 173,200 more payroll jobs than they cut (+4.3 percent), with net gains in the broad leisure and hospitality services sector generating 40 percent of the total increase. The June household survey, meanwhile, recorded a drop in unemployment, with the statewide unemployment rate falling to 7.6 percent and the number of unemployed persons declining by 41 percent.

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 scrambled 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. “Sizable month-to-month fluctuations should not mask the fact that, since February, employers collectively have eliminated 377,300 payroll jobs, with 89.5 percent of the losses originating in the private sector. Compared to a year ago, the state has 7.4 percent fewer jobs.”

In June 2020, employers added 173,200 more payroll jobs than they cut as shuttered firms re-opened following the relaxation of various stay-at-home orders. For instance, the number of payroll positions tied to accommodation & food service establishments rose by 55,900 (+20.6 percent), while the number of positions in retail trade establishments rose by 18,000 (-4 percent).

Collectively, private-sector employers added 152,400 more payroll jobs than they cut in June (+4.5 percent). Within private industry, the leisure and hospitality sector netted the most positions (+68,900, +22.3 percent), followed by the trade, transportation & utilities sector (+22,300, + 2.8 percent); the other services sector (+19,600, +14.2 percent); and the education and health services sector (+18,900, +3.3 percent). Even with these gains North Carolina had 306,200 fewer private-sector jobs (-8 percent) than it did a year ago.

“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 almost half of the net job growth logged during the decade-long expansion. For even more perspective, consider how in June 2020, North Carolina had just 303,000 more jobs than it did in June 2000.”

The June household survey offered further evidence of a scrambled labor market. Last month, the unemployment rate fell to 7.6 percent from the 12.8 percent rate logged in May. Month-over-month, the number of unemployed persons fell by 252,000 (-40.9 percent), dropping to 363,465 from 615,512. Note, however, that 24,549 people left the labor force entirely last month. If those individuals were counted as unemployed, the unemployment rate would have been 8.1 percent.  

“Since February, the number of unemployed North Carolinians has doubled, rising to 363,465 from 182,606,” noted Quinterno. “Over that period, the statewide unemployment rate more than doubled, jumping to 7.6 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 322,976 people have exited the state’s labor force entirely, thereby reducing its size to 4.8 million from 5.1 million (-6.3 percent). In June, the share of the working-age population even participating in the labor force was 57.4 percent, down from 61.6 percent in February.

Moreover, the number of employed persons has fallen to 4.4 million from 4.9 million since February. In June, only 53.1 percent of working-age North Carolinians were employed, up from May’s rate of 50.4 percent, but down sharply from February’s rate of 59.4 percent.

“The monthly employment data, while important, are lagging well behind actual economic and public health facts on the ground,” cautioned Quinterno. “The monthly employment report provides a snapshot of conditions in mid-June, but the most recent weekly unemployment insurance claims report showed that North Carolina was paying or processing 385,631 claims for regular unemployment insurance benefits, along with 237,113 claims for Pandemic Unemployment Assistance, which extends insurance to individuals who are otherwise ineligible. This suggests that unemployment remains a serious problem for hundreds of thousands of North Carolinians.”

Also, the COVID-19 crisis has worsened since the middle of June. Based on one analysis of public health data, the total number of confirmed cases in North Carolina has more than doubled since June 12, rising to 95,500 confirmed cases from 41,200. This has led the state to slow the pace of re-opening while causing some local governments to impose new restrictions on economic activities. The impact of these developments is not reflected in the June employment report.

“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 accelerated in June following the relaxation of various state and local stay-at-home orders, those gains are tenuous and could be erased by deteriorating public health conditions. Even with those gains, labor market conditions remain much worse than they were at the start of the year.”

“The virus is what is driving the negative impacts on households and businesses,” warned Quinterno. “Conditions may very well worsen over the summer if new lockdowns prove necessary, if Congress permits various forms of federal aid like enhanced unemployment insurance and the Paycheck Protection program to expire, and if public-sector employers slash their payrolls and spending in response to collapsing tax revenues.”

“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.”