NC job losses merit energetic response

by John Hood

Raleigh, NC – North Carolina employers shed 616,000 jobs in March and April, according to the latest establishment survey from the Bureau of Labor Statistics. That’s a decline of 13% in just two months. Our labor-market collapse will look even worse when BLS releases its May survey in a few weeks.

photo by Thom Masat

Were North Carolinians working at restaurants, hotels, and related industries the hardest hit by the COVID crisis and the shutdown orders it provoked? Yes. More than a third of all positions lost so far were in hospitality and food service. Over the course of two months, fully half of all hospitality and food-service jobs in North Carolina disappeared.

As staggering as those facts are, it’s important to recognize that the effects of the Great Suppression extend far beyond the obvious sufferers. Many North Carolinians who don’t work in hospitality and restaurants have lost jobs, incomes, or businesses they previously owned and operated.

For example, North Carolina manufacturers have shed 56,000 jobs. These losses occurred in both durable goods such as furniture and vehicles as well as nondurable goods such as clothing and processed foods.

While some grocery, hardware, and discount stores were considered “essential” businesses and open continuously during the shutdown, many other retail stores were closed or severely hampered by both government policy and consumer behavior. Some 51,000 of North Carolina’s retail jobs have disappeared.

Now think of all those largely unoccupied stores, businesses, and office buildings across the state — and all of the clerical, scheduling, and sales work that got suspended and the maintenance, security, and support services that were no longer needed for those unoccupied spaces. Some 300,000 North Carolinians held service jobs in these categories in February. By April, 37,000 fewer did.

The state’s economy shed another 52,000 jobs in what one might consider a surprising sector: health care and social assistance. At the start of the crisis, policymakers feared that hospitals and other providers would be overrun with COVID patients, producing unnecessary suffering and death. What actually happened is that hospitals became underpopulated, not overpopulated. Measures to expand capacity for COVID infections proved superfluous. And many patients with other illnesses or injuries stayed away, producing adverse medical and economic consequences.

Not all sectors of the labor market sustained large losses, of course. North Carolina’s tech companies, financial firms, utilities, and public-sector employers did eliminate some jobs. But so far, the effect has been less than the statewide average.

State government, for example, has shed some 6,000 jobs. Local governments have lost 20,000 positions, but that amounts to only 4% of their total employment. With big budget deficits looming, major government layoffs may still be coming over the next few months. At the moment, however, the public sector and private sectors are experiencing the Great Suppression very differently.

To survey the wreckage of North Carolina’s labor market over the past two months is not to devalue the fatalities and suffering caused by COVID-19 itself. Although the disease has proved less deadly than initially feared — by an order of magnitude — it remains deadlier than the flu and an ongoing public-health threat.

But I continue to believe that Gov. Roy Cooper’s reaction to the crisis has been too prescriptive, too broad, and too costly to the liberties and livelihoods of North Carolinians. The Cooper administration should have allowed more local variation in the regulatory burden, given that the magnitude of the COVID threat varied considerably across the state. And the administration should be following the lead of other states and nations in reopening the economy more rapidly and extensively.

Alas, ending the shutdown won’t be enough. It will take months if not years for battered North Carolina companies to recover. Some shuttered enterprises will never reopen. If we face a lengthy period of high unemployment, jobless benefits and other government aid will only treat the symptoms. Restoring our labor market to pre-crisis health means encouraging new private businesses to form — and treating all sectors as essential to the future of our state.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.