New labor data: Federal stimulus fueling some employment recovery, but a long way to go

Employment gains over past few months could be lost if more support is not provided to people experiencing the worst financial impacts of COVID-19

RALEIGH (Aug. 20, 2021) — July labor market figures indicate the pace of job growth has picked up in recent months following the passage of the American Rescue Plan, but the future pace of recovery is far from certain. In addition to being fragile, the current recovery is uneven, with job losses persisting in many of the lowest-paying industries, while some high-wage sectors have exceeded pre-pandemic employment levels.

“Federal investments made through the American Rescue Plan have certainly helped stimulate the economy and address some of the harm created by COVID-19, but if leaders at the state and local level don’t continue to invest in an equitable recovery, recent progress could easily faulter,” said Patrick McHugh, Research Manager with the North Carolina Budget & Tax Center. “It’s also worth noting these data were collected before the surge in cases driven by the Delta variant really took off, so we’ll have to see how things evolve in the coming months.”

Click for charts with new labor market data

Economic challenges facing North Carolina include:

A tale of two labor markets – high-wage recovery and low-wage recession: The headline employment figures mask a deep divide that has persisted throughout the pandemic between the job prospects in highly paid professions and lower-wage industries. Data from late July indicate that while jobs paying over $60,000 a year have increased substantially compared to pre-COVID levels, roughly 1 out of every 5 jobs paying less than $27,000 are still missing. Given that many of the good-paying jobs where growth is happening require specialized skills and experience, substantial support is needed for people who lost low-wage positions during the pandemic to access those opportunities. Many North Carolinians who were already struggling to make ends meet before COVID-19 cannot simply drop everything so they can get the training needed to access the careers where job growth is strongest.
More North Carolinians still looking for work: While the headline unemployment rate has declined in recent months, the recovery still has not created enough jobs for everyone who wants to work. Roughly 38,000 more North Carolinians reported looking for work in July than before the COVID-19 outbreak.

Worst job losses persist in many low-wage industries: The COVID-19 recession has devastated workers in some industries, while others have almost fully recovered. The largest persistent job losses since February of 2020, prior to the start of COVID-19, have occurred in industries like Accommodation and Food Service (-45,600), Education and Health Services (-33,100), and Arts, Entertainment and Recreation (-10,100).

For charts showing the most recent labor data and COVID-19 job data, visit the Budget & Tax Center’s Labor Market page at www.ncjustice.org/labormarket.

For more context on the economic choices facing North Carolina, check out the Budget & Tax Center’s Prosperity Watch report.

The nonpartisan Budget & Tax Center is a project of the NC Justice Center, which works to eliminate poverty in North Carolina by ensuring every household in the state has access to the resources, services and fair treatment it needs to achieve economic security.

FOR MORE INFORMATION, CONTACT Patrick McHugh, Budget & Tax Center Research Manager, at patrick.mchugh@ncjustice.org or 919-856-2183; or Mel Umbarger, Budget & Tax Center Senior Communications Specialist, at mel@ncjustice.org.