You Decide: Is North Carolina’s Job Market Back?

Dr. Mike Walden

North Carolina Cooperative Extension

North Carolina celebrated a major milestone recently when the October labor market numbers were released. The total number of jobs at businesses in the state (“payroll jobs”) finally reached a level that exceeded the total prior to the recession. In October 2014, there were 4,183,900 payroll jobs in the state, exceeding the pre-recessionary high of 4,174,500 set in early 2008. Payroll jobs hit a recessionary low of 3,839,200 in February 2010.

Yet it’s been a long road back, taking 6 ½ years to get past the previous job peak. This was longer than the five-year job recovery period for the early 2000s recession and the two-year job recovery period for the early 1990s recession. Of course, the same jobs lost haven’t necessarily returned – there is always a “churning” of jobs, even in the best of times.

Also, the state’s population, as well as the number of people wanting to work, has increased since 2008. The various measures of the unemployment rate, which differ by who is classified as unemployed, all have dropped since 2010, but are still higher than in 2008.

Still, the return of jobs in North Carolina is something to cheer about. But this achievement should not be interpreted as meaning there are no issues in the job market. There are issues, and they are centered on three areas: pay, missing rungs in the income ladder and technological unemployment.

Although jobs have come back, pay and income have not. Average hourly earnings for private sector jobs in the state, adjusted for inflation, are down 2 percent since 2008. Even more troubling, average (median) income for households in North Carolina, also adjusted for inflation, was 9 percent lower in 2013 than in 2008.

The climb up the income ladder also has some broken and missing rungs. One of the big challenges in recent decades has been the slow growth in middle-paying jobs. Indeed, this slow growth has continued in the current job recovery. Since 2010 in North Carolina, jobs in the three highest-paying economic sectors and jobs in the three lowest-paying economic sectors have each expanded by close to 40 percent. Jobs in the middle-paying sectors (manufacturing, government, construction and education/health care) have increased at half that rate, at near 20 percent.

Both of these labor market concerns – pay and slow growth in middle-paying jobs – are related to the third issue, technological unemployment. The concept refers to job losses stemming from new technology and machinery. Technological unemployment is not new, but some say it is accelerating and moving into new occupations.

Technological unemployment is a major reason for the relative decline in middle-paying jobs. Many tasks performed by workers in the factory have been taken over by machines. The same is true in construction and even retailing and sales.

Now there’s the likelihood that modern machinery and technology will ultimately replace workers in other sectors. Live video-supplied lectures to college classes may take the place of on-site instructors. Orders at restaurants can now be taken by computer “tablets” instead of by waiters and waitresses. Robots may soon be able do the stocking as well as the check-out in supermarkets. Some futurists worry there just won’t be enough jobs for people in the decades ahead.

None of these issues is unique to North Carolina, but we, like our national counterparts, would like the issues addressed. If there are answers, they will likely focus on two areas: the creation of new industries and a revamped educational system to rapidly respond to changing skill needs.

In the past, new industries have “saved the day” when technological unemployment released labor needs in existing industries. Factories hired workers no longer needed on the farm, and employment in services and information technology ramped up as manufacturing was downsizing its use of labor. We need to make sure we have an economic environment encouraging the development of new industries that can employ workers who lose their jobs due to technological unemployment.

At the same time we need a rapid-response educational system that can quickly retrain individuals for the skills needed in our fast-changing economy. We need a system that can impart new skills in months, rather than years. Apprenticeships, skill certificates and fast-tracked degrees may be the waves of the future in education.

Like the nation, North Carolina’s labor market is a composite of pluses and minuses. We want to encourage the pluses while addressing the minuses. You decide how this can be done.

Dr. Mike Walden is a William Neal Reynolds Distinguished Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of North Carolina State University’s College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy. The College of Agriculture and Life Sciences communications unit provides his You Decide column every two weeks.


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