Local job data: Nearly 75% of NC counties still have fewer people working than pre-pandemic

The last local jobs report for 2021 is in. Significant strides toward recovery were made, but true economic healing has still not been realized in many communities across North Carolina.

Several rounds of federal aid have helped families navigate tough times and made the recovery from the COVID-19 recession much faster than we saw in the wake of the Great Recession. North Carolina has recovered most of the jobs that were lost in the first few months of the pandemic, while at this point in the Great Recession our state was still losing jobs. These are very different kinds of crises to be sure, but there’s no doubt that massive federal assistance in the form of Unemployment Benefits, housing assistance, deferred student loan payments, and more have kept families afloat and hastened the economic recovery.

Chart showing a better federal response to COVID-19 has led to a faster recovery than during the Great Recession.

For all of the progress made in the last year, the project of rebuilding is far from over. The statewide unemployment rate for December (3.7 percent) can make it look like North Carolina has recovered from the shock of COVID-19. Sadly, that’s not the full story in many communities across the state. Nearly three-quarters of our counties still have fewer people working than before the pandemic arrived. In many cases, the losses during COVID-19 piled on top of longer-term declines that date back to before Great Recession. Almost half of North Carolina’s counties have fewer people working than before the economic collapse of 2008, a testament to the fact that we have not made the kinds of investments many, particularly rural, communities need to reverse the flight of jobs to a few urban communities.

The story is not just about the rural-urban divide. Some cities have now recovered the jobs lost to COVID-19, but most are still trying to dig out of the hole. Employment in the Triangle, Wilmington, Greenville, and the Morganton area has surpassed pre-COVID levels. On the other hand, the Greensboro-High Point area is still more than 14,000 jobs below where it was before the pandemic, the Charlotte area is over 15,000 jobs short, and Asheville is still trying to replace 6,500 jobs.

The big question is whether we can muster the political will to keep investing in rebuilding a more economically just state. Last year, our legislature continued to hand out tax breaks to huge corporations instead of supporting people and communities that need it. Federal aid over the past few years made up for some of our state leaders’ failure to do what was needed, but the uneven pace of recovery shows there’s still a lot of work to do.

If you’re interested in the jobs picture in your community or across the state, visit our labor market page to see maps and charts of what’s going on.

Patrick McHugh is the research manager at the N.C. Budget and Tax Center.

The economy in 2022: What will happen? What should happen?

Predicting the future is messy business even in the most stable of times, and whatever you want to say about the current moment, stability certainly isn’t in these days. That’s why we’re not going to join the ranks of economists putting out forecasts in January.

But that doesn’t mean we no sense of what some of the big stories of 2022 are likely to be. We here at BTC have our eye on a lot of things these days, and here are a few of the big questions that will shape the economic reality people in North Carolina will be dealing with.

Will government investments continue to speed the recovery?

Without swift, massive, and sustained government assistance, COVID-19 could easily have created an economic collapse unlike anything in recorded history. It may be hard to imagine given the enormous human toll that this pandemic has taken, but it could have been MUCH worse. Instead, we’ve seen a lesson in the power of the public purse to keep families above water and speed an economic bounce back.

Chart showing a better federal response to COVID-19 has led to a faster recovery than during the Great Recession.

Compared to the Great Recession when the federal response was much smaller, the recovery from the initial shock of COVID-19 has been remarkably swift. November marked 20 months since the state of the COVID-19 recession, and North Carolina is within 1 percent of pre-pandemic employment levels. Twenty months into the Great Recession and North Carolina was still losing jobs and wouldn’t recover all of the lost employment for more than six and a half years. Of course, the cause of these two recessions were very different, but there’s no question the much larger federal response is a big reason the recovery has been so much faster.

Several major federal packages have kept people from going broke and left some families financially better off than before the pandemic. Supplemental unemployment insurance benefits, stimulus checks, rental assistance, fiscal aid for state and local governments, and more across multiple federal laws helped keep food on tables, roofs over heads, and customers with cash in hand to support businesses.

The big question for 2022 is whether support for people and communities still trying to rebuild will continue. We’re not out of the woods yet, and people have been wrongly predicting the end of this pandemic for a long time. People are still getting sick and losing income, struggling with child care, paying rent, getting enough to eat, and other barriers to financial security. Many forms of aid and economic stimulus (like federally funded unemployment insurance benefits) have already been cut off, and there’s a real risk that the recovery will be slowed by lack of public investment.

What happens with inflation and how do we respond?

Inflation has become a legitimate concern in the past year as a lot of basic necessities have become more expensive. The official measure in December indicated the cost of the average set of goods consumers buy across the country was 7 percent higher than at the end of 2020. This level of inflation is certainly higher than anything we’ve seen in the past few decades, but nowhere near what occurred during parts of the 1970s and 1980s when inflation really did create enormous economic problems. So long as inflation stays constrained near its current levels, it’s unlikely to threaten the course of the recovery in any major way.

Some things are getting more expensive A LOT faster than others, though. Some of the biggest increases were for commodities that already consume a larger share of low-income people’s budgets than their more affluent neighbors. Gasoline was just about 50 percent more expensive at the end of 2021 than a year earlier, piped gas used in homes was 24 percent more costly, and the price of used cars and trucks was up by more than one-third. Another major question is whether the cost of rent will continue to rise. The cost of shelter increased over 4 percent during 2021, but a lack of housing stock and increasing housing costs in communities that were once more affordable could pose a major concern for lower-income renters.

Perhaps even more than inflation itself, the big question in 2022 is what policymakers will do in response. As noted already, the current level of inflation is not a systemic problem yet, but it there are real risks that our policy response may be.

The biggest concern is whether inflation is used to justify cutting off support for communities and people still being financially hurt by COVID-19. Some lawmakers like West Virginia Senator Manchin have leaned on concerns about inflation to justify opposing additional federal support, like the Build Back Better plan. Don’t believe it. Inflation is being propelled by a host of factors that have nothing to do with COVID aid, like strained broken supply chains, corporations jumping on the opportunity to pass on costs to consumers, and gas prices. We can help people hurting because of COVID-19 without driving costs much higher, so the big question for 2022 is whether we inflate the risk of inflation and stop investing in a real recovery.

Supporting a strong recovery does mean helping people who are truly being affected by rising costs. With energy, food, shelter, and transportation getting more expensive, low- and middle-income North Carolinians are going to feel the squeeze the most. Failing to provide assistance could make it harder for people to work, which would create economic problems that affect everyone.

Will the recovery become more equitable? Read more

It’s time to use the state budget to fix North Carolina’s leaky roof

Years ago, a traveling salesman was stuck outside in a thunderstorm, miles from the nearest town. At the next house he came to, a man was standing in the door watching the rain pour. The salesman walked up and asked whether he might be able to stay the night while the storm passed.

“Well,” the man replied, “the only place I’ve got is in the kitchen, and the roof leaks so bad in there you’d get just as wet as staying out here.”

Taken aback, the salesman asked, “Why don’t you fix the roof?”

“Are you crazy?” the man replied. “It’s raining out here!”

“’Course I don’t mean now,” the increasingly frustrated salesman retorted. “Why don’t you fix it when it ain’t raining”?

“’Cause then it ain’t leaking.”

There’s some wisdom in that old country yarn about where North Carolina was when COVID-19 arrived. Our state government is like the roof in the story. We had been through the longest period of uninterrupted economic growth in generations, but leaders allowed our shared home to fall into disrepair. As soon as the storm started, it became even more painfully evident how years of neglect had left our public institutions unable to cope with a crisis.

We also allowed an economic situation to evolve that left far too many families with little or no shelter of their own to fall back on. Big corporations and the ultra-rich did just fine in the wake of the Great Recession, but most families and working people in North Carolina didn’t have the savings to survive without work or income when the pandemic shuttered businesses across the state. Like the traveling salesman, millions of North Carolinians were left out in the storm with little shelter in sight.

Now the combination of broken public institutions and a top-heavy economy are undermining the pace of our recovery. As we document in a recent report, hundreds of thousands of North Carolinians face enormous barriers in their effort to rejoin the labor force. Around 250,000 people in our state, mostly women, can’t work because they don’t have access affordable child care; roughly 100,000 have site concerns about contracting or spreading COVID-19 by working in person, 50,000 lack reliable transportation, and many either can’t access the jobs that do exist or lack broadband needed to work remotely or search for a job. In most of these cases, people of color and women who had the least financial cushion to fall back on when they lost jobs due to COVID-19 face the largest obstacles to rejoining the labor market.

The good news is we have an opportunity to rebuild our collective home. As legislative leaders huddle behind closed doors to hash out a budget, the question is whether they will make the long-overdue choice to fix our public institutions or continue down the path that left us out in the rain when COVID-19 darkened the skies. After years of not passing a budget, North Carolina has billions of dollars sitting in the bank that could be used to help people still struggling to make it through the pandemic. Unfortunately, the proposals made by both the Senate and House failed to tap into those resources and would continue to hand out tax cuts to profitable corporations. State action is also urgently needed to make good use of any potential additional federal support. Years of neglect made it hard for the state to deploy previous rounds of state aid, so investment is needed to get any future relief to where it is most needed.

It certainly hasn’t stopped raining yet, but it’s time to get those hammers swinging to put a new economic roof over the people of North Carolina.

Patrick McHugh is the Research Manager with the Budget & Tax Center.

About that labor “shortage” – Look to wave of retirements, not government aid to understand

Photo by Joe Raedle/Getty Images

For all the discussion about what’s making it hard for people to return to the labor force – lack of child care, transportation, housing, training, etc. – a major story that hasn’t received nearly enough attention is how the COVID-19 pandemic has pushed a huge number of North Carolinians into retirement. 

A lot of politicians and special interests want to blame any difficulties businesses are having in hiring workers on unemployment insurance, government benefits, lazy millennials, the vague specter of “socialism, and a supposed general decline in the American work ethic. Hold for a moment the fact that the whole “shortage” story is a bit of a misnomer (there were more people looking for work in June than before COVID-19 in 97 of North Carolina’s 100 counties and every big city) , but actual labor market data and government surveys tell a decidedly different story.  

The U.S. census has been surveying North Carolinians throughout COVID-19 about how the pandemic is impacting their lives, and the responses point to a big increase in the number of people who consider themselves retired. Between July and October of last year, roughly 1,320,000 people in North Carolina reported that they were not working because they were retired. More recently between April and July of this year, the average had shot up to over 1,485,000. That’s an increase of around 165,000 people, or a 12 percent jump, in just a few months. Understandably, a lot of people who were already contemplating retirement decided that putting their well-being at risk by continuing to work during a global pandemic just wasn’t worth it. 

Compare that shift to unemployment insurance (UI), which conservative leaders and the media have blamed for businesses struggles with finding workers. In the week before the 4th of July holiday, fewer than 110,000 North Carolinians were receiving either state or federal supplementary unemployment insurance, a number has been steadily declining throughout 2021. While leaders in the General Assembly were trying to cut off federal benefits, and blaming UI for businesses inability to find workers, they failed to note or acknowledge that a far larger number of North Carolinians appear to have exited the labor market into retirement in the past several months. So, while ignoring a major driving force of declining labor force participation, leaders sought to cut off vital benefits, which have not been shown to decrease peoples’ availability for work. 

To be clear, this isn’t about blaming retirees instead of people receiving UI benefits. We should never have been pointing the finger at people forced to rely on UI benefits for our collective failure to fix our economy, any more than we should tut-tut at older people going into retirement now.  Read more

North Carolina ain’t broke (financially), so now let’s fix it – New revenue data show NCGA has a choice: help people or corporations?

Image: Adobe Stock

North Carolina has the funds to invest in a just recovery. An updated assessment of state revenues shows collections have come in stronger than previously expected over the past year and continued growth should provide some of the resources needed to dig out of the COVID-19 hole. 

First the numbers. North Carolina is on track to collect $29.5 billion in revenue for the current fiscal year and is projected to see modest revenue increase in each of the next two years. That means the state should have almost $5.6 billion more this year to fight the effects of the pandemic than came in during the last fiscal year. That could be great news for people and communities still struggling to rebuild from COVID-19, but it depends on whether the legislature chooses to direct resources to where the need is the greatest. With the state $7 billion a year short of what we have historically invested in the people of North Carolina, this jump in collections won’t get us to where we need to be, but it could be a start. 

So how did we get here?  

Some of it was federal aid preventing another Great Depression, some is corporations and high-income people having a good financial year, and some is due to the timing of when revenues actually came in. 

First, federal aid headed off what could have been worse than the Great Depression. What could have been a recession of nearly unimaginable proportions was tempered as supplemental unemployment benefits, stimulus checks, and other aid created a safety net for many North Carolinians. When the pandemic arrived in North Carolina, most people rightfully worried state revenues would shrink dramatically. But that was before the federal government stepped in with several rounds of financial assistance for people and businesses. Federal aid hasn’t addressed all of the need, but it provided a vital backstop that kept people in their homes, food on the table, and the lights on. Aid for families also helped to prop up, personal income and sales tax collections increased during COVID-19, instead of revenues falling off a cliff. The most recent round of aid passed is partially responsible for the state’s financial outlook improving even since the last forecast was released in February before the historic American Rescue Plan was passed. 

At the same time, a lot of big corporations and well-healed tar heels had a very good financial year. Many big corporations posted record profits over the last year, which drove up corporate and franchise tax payments. The figures just released expect corporate and franchise collections to jump by more than a billion dollars, an increase of more than 75% compared to the last fiscal year.  

Finally, some of the jump in collections is rooted in one-time changes which impacted when revenues were actually collected. The filing deadline for personal income taxes was delayed, so some of the revenues which would have come in during the last fiscal year showed up during the current one. Second, North Carolina started collecting sales taxes on many online sales, so sales tax collections jumped significantly, pushed even further by people shopping online during the pandemic. 

So where do we go from here?  

The choice is pretty clear. Either we invest in rebuilding a more just North Carolina or continue lining the pockets of rich people and big businesses. 

Some legislative leaders would love to divert more state resources into corporate balance sheets and wealthy shareholders’ bank accounts. The Senate recently moved to eliminate the corporate income tax entirely without really doing anything to help the families and businesses which have born the brunt of the pandemic. That bill still has not become law, so there is time to head off this most recent attempt to funnel funds into the deepest pockets. 

Now that we know the state isn’t going broke, its time for a real recovery plan. Far too many North Carolinians still face barriers returning to the workforce, covering the cost of basic necessities, and the financial fallout from COVID-19 has been the most dramatic for many low-income workers, people of color, and women.  

The question now is what leaders in Raleigh will choose to do. Will we see another windfall for profitable corporations and wealthy people, or a down payment on a just recovery. Justice and economic imperative point in the same direction – invest our public funds in building a better future. 

Patrick McHugh is the research director for the nonpartisan N.C. Budget & Tax Center. Mel Umbarger contributed to this post.