Author: Andrew Berger-Gross
The COVID-19 pandemic has led to record-high job losses across the nation. However, throughout much of the pandemic, employers have reported difficulty finding the workers they need to fill open positions. How can we explain this apparent contradiction? This article uses newly released data from North Carolina’s Labor Supply and Demand Dashboard to illustrate the trends underlying this unprecedented combination of mass layoffs and labor shortages.
North Carolina lost around 867,000 employed workers at the height of the COVID-19 recession, between February and April 2020 [Figure 1]. However, only a fraction of those who lost work looked for another job: the number of jobseekers in our state increased only 147,000 by May 2020. The employment situation improved considerably over time: our state regained around 703,000 employed workers as of May 2021. But that still leaves us with an employment shortfall of 164,000. Meanwhile, the number of jobseekers is only 32,000 higher than prior to the pandemic, indicating that only a fraction of those who remain without work are actively looking for another job.
While the supply side of our labor market has been lackluster, the demand side is stronger than ever. The number of job openings in North Carolina skyrocketed following its April 2020 low point and now stands at around 109,000 (42%) above its pre-pandemic level [Figure 2].
This combination of low supply and high demand has led to a shortage of jobseekers throughout much of the pandemic, a situation that economists call a “tight labor market”. Such conditions can be challenging for employers, who have fewer jobseekers to choose from and, as a result, may find it difficult to fill open positions. However, this can also represent a boon for workers, who face less competition from other jobseekers and thus may have an easier time landing employment when the labor market is tight.
There were only 2.5 jobseekers per job opening in North Carolina during the worst of the COVID-19 recession in April 2020 [Figure 3] – far fewer than during the Great Recession (9.4), and even fewer than during the economic boomtimes preceding that recession (3.2). As of May 2021, there was only 1.0 jobseeker per job opening in our state – even fewer than prior to the pandemic (1.3). Similar trends are occurring nationwide. This arguably represents the most difficult hiring environment for employers in a generation or more, and consequently, this is the most promising labor market for jobseekers within recent memory.
Labor markets are now extraordinarily tight across nearly all regions and sectors of North Carolina’s economy. However, of the 109,000 job openings added since February 2020, most have been in fields like food preparation and manufacturing production that often require in-person contact with customers or coworkers and typically pay below the statewide median wage [Figure 4].
Check out North Carolina’s Labor Supply and Demand Dashboard to learn more about conditions in our state’s various regional and occupational labor markets. We recently added monthly data to the website, allowing you to track North Carolina’s evolving labor market situation as it unfolds. We will update these data on a monthly basis moving forward.