WilmingtonBiz Magazine

Sound Off: So, What Happens Next?

By Adam Jones, posted Mar 24, 2021
Adam Jones
If you believe the national forecast of an impending 7% drop in retail employment, 3% decline in food service and 9% decrease in travel and accommodation employment over the next decade, driven by behavioral shifts to the “new normal,” then Southeastern North Carolina is in trouble!
But it’s more likely that the direst predictions are overblown, and Wilmington isn’t the U.S.
The decline in restaurant employment from increased telework will disproportionately affect the larger metro areas, and – even now when most people are not flying – our regional tourism market is proving remarkably resilient.
More likely, we will have our own unique challenges to face as teleworkers who moved to the area in search of affordable real estate and quality of life (ironically making the area less affordable) are called back to the office and must decide whether to go or stay.
The challenge for our region will be managing the transition back to a non-pandemic world.
Economists tend to think of disruptions and shocks to the economy as transient, persistent or a structural change, permanent.
Since we’re all tired of talking about the pandemic’s disruption, let’s turn our attention to the “new normal,” if we believe there is such a thing.
Transient effects are those that are short-lived and pass (such as online kindergarten we hope!), while persistent effects are not permanent but tend to fade or normalize more slowly (some remote work). And structural changes mean the world has changed in a more permanent way (online ordering for take-out meals).
Structural changes we’re seeing were likely already in motion before the pandemic but accelerated by it.
For example, the Bureau of Labor Statistics (BLS) darkened its outlook for retail employment, assuming that online shopping’s growth has accelerated due to the pandemic, but let’s face it, retail was already in the process of reinventing itself prepandemic.
Thinking about our local challenges versus those of the nation or larger metro areas, we’re reminded that what’s true for a group may not be true for all its members.
The most recent update to the BLS’ occupational outlook suggests that the pandemic may negatively affect employment in the restaurant industry for a sustained period as remote work lessens the demand for lunchtime meals.
And while the national outlook is helpful in thinking about the regional outlook, one needs to be cautious about applying too much weight for specific industries and occupations.
Without getting bogged down in the details of the BLS methodology, the update is driven by a basic assumption, teleworking will persist.
But history suggests that might be a “strong” assumption, and the Wilmington area is not one of densely occupied office towers. Our employment is composed of work that is difficult to do remotely (health care, education, tourism, etc.), and the national projections of a structural change are not likely to be informative for thinking about our region.
Further, anecdotal evidence (and room occupancy taxes) suggests an intrinsic desire to travel remains strong, and the collaborative nature of innovation and work is likely to push against the pandemic-induced teleworking, not to mention the extroverts who are dying to get back into the office.
The challenges in our future are likely to be less about a dramatic shift in our local employment and more about managing the large number of new residents who may see their current telework disappear; even forward-thinking firms like Goldman Sachs are starting to talk about bringing workers back.
As the persistence of telework declines, we may well have an “opportunity” to integrate those workers more fully into our local economy as they search for work locally.
Whether the effects of the pandemic bringing talent to our region are transient, persistent or a structural shift depends on how we respond to the “opportunity” in our future.
Adam Jones is a regional economist with UNCW’s Swain Center and an associate professor of economics at UNCW’s Cameron School of Business.
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