With heightened unemployment benefits timing out Friday and no new federal package to replace them, a regional economist says there might not be enough jobs in the region to employ all of those who want to return to the workforce.
Unemployment benefits under the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law by President Trump in March, included an additional $600 a week for those collecting unemployment because of the COVID-19 pandemic.
As of press time Friday, there was no federal government legislation passed that would extend benefits, although options were being discussed.
Adam Jones, a regional economist with the University of North Carolina Wilmington, said that while some people might return to work as additional unemployment benefits time out, there could be issues with the type and number of jobs available in a still-limited economy because of state COVID-19 restrictions.
"I expect that a reduction in federal benefits will encourage people to return to work but the effect on employment will be relatively small as demand for labor is still relatively weak," he said.
With about 4,500 job openings in New Hanover County and about 9,000 unemployed, Jones said, it will still be difficult to find work. That's especially true "if you assume that a significant number of those 4,500 are technical jobs that require specific skills," he added.
"The largest job losses have been in retail and hospitality. You might reasonably assume that the skills of those workers are not a good match for engineering or program positions in the short term," Jones said. "I’m sure many could retool but not in the next couple weeks."
Unemployment trended down somewhat month-over-month
in the most recent state report, which showed New Hanover County was down from an unemployment rate of 13.8% in May to 7.6% in June.
From March 15 to date, there have been more than 834,800 people paid unemployment insurance benefits in the state and more than $6.6 billion in unemployment payments issued in the state, according to the N.C. Department of Commerce
"An extra $600 a week of unemployment benefits is substantial when compared to average retail weekly wages of $750, so combining federal and state benefits, many who are unemployed may actually be earning more and, thus, have little incentive to return to work unless the right long-term opportunity comes along," Jones said. "Thus, a reduction in the federal top-up may encourage people to seek and accept work."
For people to return to work, however, they need jobs, he said. And in this region, the jobs in retail or leisure and hospitality, for instance, may not be as plentiful right now.
"Consumer spending at the national level is down from last year 4.8%, and retail employment in the region is down only 3.4% from last year, which suggests to me that in order for retail employment to increase we need consumer spending to return," Jones said.
"The story for leisure and hospitality is a little different though; we’re still down over 30%. But the leisure and hospitality industry is largely dependent upon reopening policy."
Although numbers seem to have flattened off for Wilmington, they are "still elevated and aren’t suggestive of a major lifting of restrictions anytime soon," he added.
The timing out of the benefits could help companies in the leisure and hospitality industry that are looking for employees find them more easily, but the demand in the industry still needs more of a resurgence, he said.
"The current job listings are more heavily concentrated in grocery stores, fast food restaurants and health care services at the moment, which suggests we’re still waiting on capacity and demand to return," he said.
Jones said he expects regional unemployment to stay relatively flat, however, "we should also consider that the change of seasons and consumers will have an effect as well," he said.
"How many students return will have an effect on demand in the region as well, but I expect that employment and unemployment levels will remain somewhat steady until reopening policy changes," he said.
Wilmington Chamber of Commerce officials said Friday that it's important for people to get back to work as soon as possible.
"We are hopeful that many people whose unemployment benefits are declining and/or running out will find the available opportunities," said Natalie English, president and CEO of the chamber.
For its members, however, health concerns and challenges with child care for the workforce are presenting some obstacles to fully getting back on the job, she said.
"We know the only way we can continue making progress in reopening our economy is by practicing social distancing, wearing masks and continuing to do our part to limit the spread of this coronavirus," English said. "We must also create opportunities for child care and education for parents of young children whose work requires them to leave the home."