By George Shaw
The Big Picture
Although there has been a resurgence in jobs since the low point last April, the recovery in employment has been uneven. The headline rate of unemployment for the Raleigh area dropped to 5.7% in February according to data released this morning. However, the monthly growth in employment is very small as many left the labor force. This means that the gross rate of unemployment is significantly higher than the headline rate.
Total employment in our area is down 3% compared to a year ago. However, segments of employment paying above average wages have grown 1% over the last twelve months; those with wages below average have declined nearly 6%. Leisure and Hospitality is the segment that has the lowest average wages. It still lags employment last February by 21.5%.
Yet, our area compares well to a group of a dozen peer metropolitan areas. The Raleigh area had the top performance for employment in the private sector over the last year. It also has the third highest growth rate for segments with wages that is above average. And it has experienced the least decline in segments with pay that is below average. However, its performance for the lowest paying segment (Leisure and Hospitality) is only average.
Overall Unemployment
The unemployment rate in North Carolina was 3.6% in February and peaked at 12.9% in April. It was 5.9% in January and slid to 5.7% in February. Employment grew by a modest 4,800 while unemployment decreased by 10,900. Employment has rebounded 692,000 since April; the figure remains 175,000 lower than before COVID-19 impacted our state. Unemployment was 287,000 last month vs.183,000 a year ago.
The percentage of the population participating in the labor force was 59.8% in February compared to 61.3% a year before. This means that the labor force is 72,000 smaller in February than it was a year before despite an increasing population. Adding this figure to the official number for unemployment, the total unemployed in our state is more than 350,000. Therefore, the gross rate of unemployment is around 7%, not 5.7%.
The trend for Wake County is similar to those of North Carolina. February 2020’s unemployment rate was 3.2% and it rose to 11.5% by May. The rate for this February was 4.7%, down from 5.0% the previous month.
Unemployment was 23,600 in February 2020 and spiked at 77,000 in May. It was 34,500 this past February, virtually unchanged since last October. In addition, approximately 17,000 residents of our county have left the labor force compared to a year ago. This makes the gross figure for unemployment around 40,000 for Wake County, a rate of nearly 6%.
Unemployment by Category
The only labor categories with year-over-year growth through December 2020 are Professional and Business Services (one of the highest paying categories) which is up 4.5% and for Trade, Transportation and Utilities which has increased 4.8% (one of the lower paying categories because of the large number of drivers as well as retail sales jobs).
The steepest decline over the last year has been Leisure & Hospitality, the lowest paying category. The number of jobs for this area is down 21.5% over the last year to February. This compares with a 20.4% reduction last November but a 48% decline last April.
How Does Raleigh Compare to Other High Growth Hubs?
Raleigh has been grouped by McKinsey as a high performance hub with a dozen other mid-size metro areas. Raleigh’s performance in the last month was about average in most of the labor categories. However, it has performed better than average for total non-farm employment as well as for both higher and lower wage segments. Although Leisure and Hospitality employment is 22% lower than February 2020, that is significantly better than the average of a 29% decline for the 13 hubs. States with Democratic Governors have witnessed a 27% decrease in jobs in Leisure and Hospitality; those with Republican Governors have shown a 17% reduction compared to a year ago
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