North Carolina’s economic recovery is too slow

by John Hood

Raleigh, NC – During the month of May, 38 states saw their unemployment rates drop as governments eased COVID-19 restrictions and allowed more businesses to open and individuals return to work.

image by Kjrstie

In North Carolina, Gov. Roy Cooper eased COVID-19 restrictions during May, as well. But his phased reopening was relatively slow and narrow. Not coincidentally, North Carolina bucked the national labor-market trend — and not in a good way. Our unemployment rate in May was 12.9%, unchanged from April. That’s higher than in any of our neighboring states. It’s higher than the Southeastern average of 11.5%.

Other labor-market indicators did tick upward. North Carolina’s employment-to-population ratio was 50.4% in May, up from 49% in April. And North Carolina employers added some 67,000 net new jobs in May.

So, even Cooper’s limited reopening plan was helpful. But such glacial progress is not an adequate response to the economic challenge facing North Carolina. Our employment rate is still lower than that of our neighbors. And those 67,000 new jobs in May came after a stunning 616,000 jobs went away in March and April. Our state is replacing our lost jobs at a rate slower than the national average.

Yes, I know Cooper’s cautious approach is intended to reduce COVID-19 deaths. I also know that recent increases in cases and hospitalizations have prompted some to argue North Carolina is reopening too quickly, not too slowly. I recognize public officials are under extreme pressure and face difficult questions with no easy answers.

But I’m not persuaded that North Carolina is right and most other states in the Southeast are wrong. There is no consistent pattern in regulations and COVID deaths. Virginia (tightly restricted) and Georgia (less restricted) have higher deaths per capita than North Carolina. But South Carolina’s is roughly the same and Tennessee’s is lower. Both have fewer restrictions and are experiencing more rapid economic recoveries.

Increases in testing explain most of the recent increases in North Carolina’s confirmed cases. It’s also one of the explanations for the hospitalization trend. As North Carolinians return to hospitals to receive surgeries deferred from the spring, some are testing positive for COVID. It’s not the reason they were admitted, and their COVID symptoms might be mild or nonexistent, but they are still in the COVID count.

That’s not all that’s happening, to be sure. If you look at North Carolina’s latest statewide reports, you’ll see that that the share of visits to emergency departments by patients with COVID-like symptoms has been fluctuating within a narrow range of about 2.5% to 2.7% since early May. There are still North Carolinians getting sick, not just getting infected. But there has been no increase in the share of those emergency-room patients who end up being hospitalized or placed in intensive care. Indeed, those shares went down last week, not up.

So far, deaths from COVID-19 in North Carolina have continued to follow a downward trend, not an upward trend. By all means we should monitor these trends over time. But state leaders should accompany such vigilance with a stronger emphasis on economic recovery.

Remember that lost jobs and incomes have adverse social and medical consequences, as well. North Carolina’s state and local governments are also grappling with massive budget deficits that will lead to sharp reductions in public services and employment. A more robust economic recovery — opening gyms, entertainment venues, and other sectors still shuttered or severely constrained by Cooper’s executive orders — will help to soften the public-sector blow by producing new revenue and creating job opportunities for those displaced by cuts in government.

In February, before COVID-19 hit, 59.4% of North Carolina adults were employed and our jobless rate was 3.6%. Of course it will be quite a while before our labor market recovers to that extent. That’s why every month counts. Every month we keep parts of our economy sidelined will be another month of frustration, loss, and despair for far too many North Carolinians who simply want to get back to work.

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.