By George Shaw
Summary
The unemployment rate in Wake County increased from 3.7% in April to 4.2% as the total labor force remained largely unchanged and unemployment increased. A broader measure of unemployment which includes part time and discouraged workers, remains about 8%.
Job categories paying above average have almost completely recovered from the economic dislocations of the last year. However, the lowest paying category (Leisure & Hospitality) remains more than 18% below the expected number of jobs. Our area is one of 13 high growth hubs nationally. Wake County is among the top third in most indicators of employment recovery for the hubs. This applies to both the last three months as well as the last year.
The portion of the population below the poverty level or who are working poor is likely to remain elevated with continuation of a relatively slow recovery in employment in lower wage categories.
National
The three main sources of data on employment tracked by the federal Bureau of Labor Statistics continue to give conflicting signals. This is because they measure different things for different purposes.
The Job Openings and Labor Turnover Survey (JOLTS) – reported 9.2 million openings in June, an all-time high. This is up from 8.1 million in April. Job categories that pay more than average declined roughly 7% to 3.1 million while Leisure & Hospitality (the lowest paying category) remained at 1.4 million openings. Much of the growth was in Trade, Transportation and Utilities.
Total hires decreased 2% while separations declined 8% in May, leaving about an increase of roughly 600,000. This reduction was concentrated in higher paying categories, leaving a net increase of 55 thousand jobs. Yet jobs in Leisure and Hospitality grew by 343,000 in the same period.
Household Survey. The most widely quoted measure is the unemployment rate which edged up from 5.8% in May to 5.9% in June. This comes from a monthly survey of households. Total unemployment nationally remains 9.5 million with an increase of 168,000 in June. These figures (the Bureau of Labor Statistics U-3 Series) represent a relatively narrow definition of employment. A broader measure (U-6) includes marginally attached and part time employees). It declined from to 9.9% of the labor force in June; that means that approximately 16 million are either unemployed or underemployed.
Establishment Survey. The final monthly assessment is the survey of business establishments. It continues to show steady increases in employment nationally. The number of employed increased 269 thousand in April, 583 thousand in May and 850 thousand in June.
How does the establishment survey data compare with total employment before the pandemic? The United States was down 10.6 million in civil employment in April 2021 compared to a level if there had been no pandemic. This figure dropped to 9.6 million in June.
Which employment categories did best in June? Leisure and Hospitality was 45% of the growth, followed by Government (22%), Trade, Transportation & Utilities (12%) and Professional Services (8%). Although the overall workforce grew by 0.6%, lower paying jobs increased by 1.1% with Leisure & Hospitality growing 2.4%.
What are the primary reasons for the uneven rebound in employment? Massive federal stimulus programs blunted much of the economic impact for businesses and individuals. The number of bankruptcies has been much smaller than feared while there has been a tremendous increase in the number of entrepreneurial start ups. A significant share of those receiving $300 per week stimulus checks make more money by not working. That program is scheduled to end on September 6.
Child care issues will remain significant until more students go back into the schools full time. Many businesses are still not completely open or have increased the automation of their operations. And there remains significant concern over COVID, especially among front line workers.
A final factor is constraints on labor mobility, especially non-compete clauses in employment contracts as well as rigorous licensing requirements. This is an area for potential collaboration across the political spectrum. The American Conservative on April 4, 2019 estimated that approximately one-fifth of American workers have had to sign non-compete clauses. And that more than 25% of fast food outlets require such agreements.
Non-compete agreements are understandable when intellectual property or trade secrets are at stake. But why restrict a fast food worker or a janitor from going to work for a rival organization for 24 months or a radius of 50 miles?
The July 2021 outlook for employment is for modest improvement. US employment in the private sector increased by only 330,000 in July according to the ADP National Employment report released today. This is about half of the increase in jobs forecast by economists. Economists, however, forecast an increase of about 800,000 jobs in July from the Employment Survey.
North Carolina
The unemployment rate in North Carolina was 3.6% in February 2002 and peaked at 12.9% in April of last year. It was 5.2% in March and slid to 5.0% in April. It further declined to 4.8% in May and 4.6% in June. The rate for the Tar Heal state is now 1.3% lower than the national average.
Yet, total employment in North Carolina grew only 0.25% in the three months to June which is less than the rate of increase in the labor force. Meanwhile, the non farm labor force grew 0.8% in the last three months. The total growth in employment was 37 thousand. Roughly 60% of this growth derived from Leisure and Hospitality and 30% from government employment.
Wake County
Unlike the steadily lower unemployment rate for North Carolina, the corresponding figures for Wake County have been increasing. The rate was 3.0% in February 2020 and ballooned to 12.2% by May of last year. After dropping sharply to 3.7% in April 2021, it rose to 4.2% by June 2021. This change was caused by a flattening in non farm employment while unemployment increased from 26.5 thousand in April to 30.5 thousand in June.
A broader index of unemployment that includes part-time and discouraged workers is a more complete measure of the labor situation in Wake County. This expanded definition increases unemployment in our country from the reported 4.2% to about 8% in June.
Unemployment by Category
Which categories of employment are growing and which are not?
Total employment in Wake County declined 5.5% during the year to June 2021 when adjusted for the growth in the labor force. The strongest growth has been in higher wage areas such as Construction as well as Professional & Business Services and Trade, Transportation & Utilities where the pay is below average. The weakest recovery has been in Education & Health Care as well as Leisure & Hospitality and Other Services.
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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 three months was below average four for the other categories for total non-farm employment but in the top.
Raleigh remains among the top performers among the 13 hubs on a year-to-year basis through June. Although Leisure and Hospitality employment is 18% lower than in March 2020, that is significantly better than the average of a 23% decline for the 13 hubs. A reduction in the number of jobs in Trade, Transportation and Utilities counterbalanced an increase in Leisure and Hospitality.
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