South By North Strategies, Ltd.

CHAPEL HILL, NC (August 21, 2020) – In July, employers in North Carolina collectively added 57,200 more payroll jobs than they cut (+1.4 percent), with net gains in the government sector generating 76 percent of the total increase. The July household survey, meanwhile, recorded a rise in unemployment, with the statewide unemployment rate increasing to 8.5 percent and the number of unemployed persons jumping by 18 percent to 419,812.

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 continues to scramble 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 obscure the fact that, since February, employers collectively have eliminated 325,700 payroll jobs, with all of the losses originating in the private sector. Compared to February, the state has 7.1 percent fewer jobs.”

In July 2020, employers added 57,200 more payroll jobs than they cut, as firms continued to re-open following the relaxation of various stay-at-home orders. For instance, the number of payroll positions tied to accommodation & food service establishments rose by 8,500 (+2.2 percent). Even with that gain, the sector is almost 30 percent smaller than it was in February.

Collectively, public-sector employers added 43,400 more jobs than they cut in July (+6.2 percent), with virtually all of the job creation occurring among local governments. The private sector, in contrast, netted 13,800 payroll positions (+0.4 percent). Within private industry, the leisure and hospitality sector netted the most positions (+8,500, +2.2 percent), followed by the professional and business services sector (+4,800, +0.8 percent) and the trade, transportation & utilities sector (+3,600, + 0.4 percent). Those gains were offset by net losses in the manufacturing sector (-5,600, -1.3 percent) and the other services sector (-1,000, -0.6 percent).

“The COVID-19 crisis ended the economic expansion that began in North Carolina in early 2010,” observed Quinterno. “Since February, the state has given back 72 percent of all the job growth that occurred in North Carolina between late 2007 and early 2020. For more perspective, consider how, since February, the state has lost about the same number of jobs as it did at the worst part of the last recession. North Carolina has experienced in five months job losses that took a bit more than two years to occur in a downturn widely regarded as being horrific.”

The July household survey offered further evidence of a wildly gyrating labor market. Last month, the unemployment rate rose to 8.5 percent from the 7.5 percent rate logged in June. Month-over-month, the number of unemployed persons rose by 62,712 (+17.6 percent), rising to 419,812 from 357,100. At the same time, the number of people in the labor force rose by some 135,000 people in July, which suggests that more workers have returned to work or resumed looking for work.

“Since February, the number of unemployed North Carolinians has more than doubled, rising to 419,812 from 182,606,” noted Quinterno. “Over that period, the statewide unemployment rate has more than doubled, jumping to 8.5 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 192,505 people have exited the state’s labor force entirely, thereby reducing its size to 4.9 million from 5.1 million (-3.8 percent). In July, the share of the working-age population even participating in the labor force was 58.9 percent, down from 61.6 percent in February.

Moreover, the number of employed persons has fallen to 4.5 million from 4.9 million since February. In July, only 53.9 percent of working-age North Carolinians were employed, up from June’s rate of 53.1 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-July, but the most recent weekly unemployment insurance claims report showed that North Carolina was paying or processing 228,244 claims for regular unemployment insurance benefits, along with 188,906 claims for Pandemic Unemployment Assistance, which extends insurance to individuals who are otherwise ineligible. Another 208,000 claims were filed for other programs, primarily Pandemic Emergency Unemployment Compensation, which provides benefits to those who have exhausted their regular benefits. All of this suggests that unemployment remains a problem of crisis proportions.”

Also, the COVID-19 crisis has worsened since the middle of July. Based on one analysis of public health data, the total number of confirmed cases in North Carolina has almost doubled since July 12, rising to 149,900 confirmed cases from 85,700. This has led the state to continue its go-slow approach to re-opening while causing some local governments to impose new restrictions on economic activities or to extend existing restrictions. The impact of these developments is not reflected in the July employment report, nor is the fallout in university communities where campuses opened only to quickly close and return to online operations.

“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 has trended up in recent months, the state has lost about as many jobs as it did at the worst part of the Great Recession. Many of the recent gains are tenuous and could be erased by deteriorating public health conditions. By any measure, North Carolina is mired in a severe recession.”

“The virus is what is driving the negative impacts on households and businesses,” warned Quinterno. “Conditions may very well worsen over the fall if new lockdowns prove necessary, if Congress fails to re-authorize various forms of federal aid like enhanced unemployment insurance and economic impact payments, 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 on every front sooner rather than later.”