NC’s unemployment continues to decline, but economists say labor force participation remains down

Capitol Report

RALEIGH, N.C. (WNCN) – A report released Friday shows North Carolina’s unemployment rate dropped again in September to 4.2 percent, but economists said labor force participation remains below what it was before the pandemic began as some industries struggle to hire.

Last month’s unemployment rate was down from 7.3 percent in September 2020.

“In North Carolina, that means we’re about 100,000 people who would be either working or looking for work if we had that labor force participation rate we had pre-pandemic,” said North Carolina State University economist Mike Walden. “That’s, I think, the issue right now. Why aren’t more people out there wanting jobs?”

The updated numbers were calculated just as federal unemployment benefits ended in early September.

“Those payments, a variety of payments, have had some impact. But, they don’t explain the entire situation,” Walden said.

As part of the American Rescue Plan, which Democrats in Congress backed earlier this year, enhanced federal unemployment benefits were extended. In addition, qualifying families with children began receiving monthly payments in July as part of the expanded child tax credit.

Republicans have blamed payments like that from the federal government for deterring some people from taking jobs.

“At some point, we have to rein this in. We can never incentivize someone not going to work,” said state House Speaker Tim Moore (R). “It’s undermining our system, and it’s really negatively impacting employers.”

On Friday, state Democrats completed a weeklong tour of the state promoting steps the Biden administration has taken, including getting the American Rescue Plan passed, and urging Congress to pass the major social policy bill, known as the Build Back Better Act, they’ve debated in recent months. It could include an extension of the enhanced child tax credit and more affordable child care.

“Anything that could help with preschool or child care will help get some of these folks back to work. It’s not that people don’t want to work, it’s that they have these issues that they’re trying to address,” said MaryBe McMillan, president of the North Carolina AFL-CIO. “Working families still are struggling and need that boost to get back on their feet.”

They spoke at David Meeker’s recently opened Young Hearts Distilling in downtown Raleigh.

Meeker said it’s been challenging trying to get the business going amid the pandemic. He opened in August just as the delta variant was surging in the state.

He said hiring has been a challenge.

“It’s been really hard. But, some good things are coming out of it,” he said.

Meeker said the changes in the labor market have led him to raise wages and adjust hours.

“We’re doing a lot of things to make it more attractive to work at our place than we did before,” he said. “I think a lot of people left the industry because the industry didn’t take care of them.”

Walden said there are a variety of factors contributing to the current labor market issues, including that many workers who lost their jobs as the pandemic began decided to further their education to attain higher-paying jobs.

“I know people like to point out one thing and say, this is the factor. There are a lot of factors here. There’s a fear of COVID,” he said. “I think the federal payments are just one element in that.”

He said as the delta surge subsides, he expects more people to return to work.

“The fear factor about getting COVID goes down. Vaccination rates go up. We return to some sense of normalcy,” he said.

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