By George Shaw
Summary
Economic recovery generally slowed down in August. Although the headline unemployment rate at national, state and county levels continued to drop, the growth in employment was disappointing. There was more improvement in higher than in lower paying jobs in August as the delta variant of the virus flared up in many parts of the country and the backlog of job openings continued to set records.
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. There are currently 30% more job openings than there are unemployed at the national level.
The Job Openings and Labor Turnover Survey (JOLTS) reported 10.9 million openings in July, an all-time high. This is up from 9.4 million in May and 10.2 million in June.
Job categories that pay more than average grew 9% to 3.7 million openings in July. Categories with lower than average compensation grew 2% with 8% growth in Leisure & Hospitality and a 8% reduction in Retail Trade Positions
Total hires decreased 2% while separations grew by 2% in July, leaving about an increase of roughly a million employees. According to this measure, the net increase in Leisurfe & Hospitality was 400 thousand jobs.
The highest vacancy rates are in Leisure & Hospitality (10.7%), Professional & Business Services (8.1%) and Education & Health (7.7%). The lowest rates among the major categories are in Construction (4.2%), Government (4.6%) and Finance (5.8%).
Household Survey. The most widely quoted measure is the unemployment rate which continued its decline to 5.2% at the national level in August. This compares with 5.4% in July and 5.9% in June. This comes from a monthly survey of households. Total unemployment nationally remains 8.4 million in August vs. 8.7 million in July. 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 to 8.8% of the labor force in August. That means that approximately 14 million are either unemployed or underemployed.
Establishment Survey. The final monthly assessment is the survey of business establishments. The increase in employment in August was a disappointing 235 thousand nationally including no growth in the lowest paying job category, Leisure & Hospitality as well as a decrease of 28 thousand in trade and transportation.
How does the establishment survey data compare with total employment before the pandemic? The United States was down 8.8 million in civil employment in August 2021 compared to the level if there had been no pandemic. This was the first increase in this metric since the beginning of 2021. The outlook is for modest improvement with the national unemployment rate dropping to around 5.0% in September and to around 4.5% by the end of the year.
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 4.4% in July 2021 and was 4.3% in August. It further declined to 4.8% in May and 4.6% in June. The rate for the Tarheel state is now 0.9% lower than the national average. It is lower than Tennessee’s 4.6% but higher than those of neighboring Georgia (3.5%), Virginia (4.0%) and South Carolina (4.2%).
However, private sector employment in North Carolina increased only 1600 in August (0.4%) which is much less than the rate of increase in the labor force. Categories paying higher than average fell 900 positions while Leisure & Hospitality grew 2300 jobs in the last month.
Wake County
The unemployment rate for our county declined from 4.2% in July to 3.9% in June while private sector employment rose 0.2%. 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 3.9% to about 7% in August.
Which categories of employment are growing and which are not?
Total employment in Wake County declined 5.4% during the year to August 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. In addition, there has been significant growth in Trade, Transportation & Utilities where the pay is below average. The weakest recovery has been in Education & Health Care as well as Leisure & Hospitality where employment remains down 17% adjusted for the growth in the labor force.
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. Wake County’s performance lagged many of the other hubs during the last month. However, it remains among the best performers over the last twelve months through August:
o Total Non-Farm Employment – 4th of 13 high growth hubs trailing Tampa, Austin and Charlotte
o Total Private Sector Employment – 5th of 13 behind Tampa, Charlotte, Austin and Denver
o Higher Wage Segments – 2nd behind Austin
o Lower Wage Segments – 3rd behind Tampa and Denver. Our area ranked 6th in July 2021.
o Leisure & Hospitality – 3rd behind Tampa and Denver
Yet, the high growth hubs have had a mixed track record compared to the overall economy. Although the overall recovery has been similar, the high growth hubs have outpaced the national level for higher paying job categories. And they have lagged significantly in recovery for lower paying categories, especially for Leisure and Hospitality.
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