A look at Industry Level Employment from the Covid Pandemic

In March it was revealed that total nonfarm employment in North Carolina returned to pre-pandemic levels by the summer of 2021. The release of the Q2 2022 Quarterly Census of Employment and Wages (QCEW) data gives us an opportunity to dig deeper into the employment numbers to understand which industries have grown through the COVID recovery and which ones have still not recovered. Between Q2 2019 and Q2 2022, NC employment across all industries grew almost 4% (178,855 jobs).

Since QCEW data is not seasonally adjusted, we need to compare it year over year. With the COVID recession starting in Q2 2020, we will use the Q2 2019 numbers as our pre-COVID baseline. It should be noted that workers who are self-employed or are independent contractors are not reflected in QCEW data.

NC Industrial Employment growth between Q2 2019 and Q2 2022

Greater than 10% employment growth was seen in five industries. Transportation and Warehousing grew the fastest, 22.5%, adding 36,000 jobs. Employment gains in this industry were seen in four subsectors related to home delivery from local or internet retailers, distribution warehouse facilities storing and delivering inventory for large retailers like Amazon or Wal-Mart, and private transportation. That makes sense considering people were attempting to avoid crowds and these industries helped facilitate that desire.

The second largest growth rate was in Professional, Scientific, and Technical Services adding more than 51,000 jobs during the study period.  This industry has been one of the state’s fastest growing industry sectors since 1990 and this trend continued through the recession.  Many of the jobs in this industry lend well to work from home and would not have been as likely to be eliminated during COVID.  Two-thirds of the jobs added in this industry between Q2 2019 and Q2 2022 were in three subsectors.

The third largest growth rate was in Finance and Insurance adding more than 34,000 jobs.  While there were many reasons for this growth, two documented ones are “panic buying” life insurance and an increased demand for mortgages to purchase new homes or refinance existing loans with historically low interest rates.  More than 24,000 of the new jobs in this industry were added across two subsectors.

One result that may surprise people is the slight decline in employment in the Health Care and Social Assistance industry.  This industry lost a little more than 900 jobs between Q2 2019 and Q2 2022.

NC Employment Growth for Selected Subsectors of the Health Care and Social Assistance Industry between Q2 2019 and Q2 2022.

Almost 17,000 jobs were lost in areas that provide services for addiction and mental health as well as care for the elderly.  These losses outweighed gains in employment in Doctor’s Offices, Community Relief Services, Hospitals, and Lab Testing.  

These statistics make sense when we think about how the public and our institutions have responded to COVID over the past two years. Elective medical procedures and preventative care were delayed or postponed due to virus exposure for much of 2020 but have rebounded with the availability of COVID vaccines and enhanced safety.  Fears about COVID spread in nursing and group homes led many to bring their elderly loved ones home during the pandemic. However, COVID remains a significant risk for the elderly and immunocompromised, and continued remote work opportunities allow many to continue to watch over their loved ones from home.

Does this represent a change from previous trends?

One question we ask is whether these changes are temporary and related because of COVID.  We will not understand any long-term effects of the COVID recession for several years, but we can look back at the previous years and see if there is any difference to start to understand what those changes might be.

NC Industrial Employment Growth Q2 2016-Q2 2019 and Q2 2019-Q2202

When comparing the change in percentage growth between the two three-year periods, it appears that growth did accelerate during the recovery from the COVID recession for some industries.  The fastest growing industry over the past three years, Transportation and Warehousing, also experienced the third largest percentage point increase (6.4 points) compared to the three years preceding the pandemic (Q2 2016-2019).  A positive change in growth rate of more than 5 percentage points was also seen in:

• Information, which includes web hosting services, software publishing, and media streaming companies, experienced an 11.3 percentage point change from a modest decline to above average growth; 
• Administrative and Support Services, (which includes temp services in addition to janitorial/cleaning services); and 
• Finance and Insurance.

The Accommodations and Food Services Industry’s growth rate between the two periods declined more than 10 percentage points.  Other industries that experienced a slowing rate of growth greater than 5 percentage points include:

• Arts, Entertainment, and Recreation; 
• Educational Services;
• Health Care and Public Assistance;
• Management of Companies and Enterprises; and 
• Mining, Quarrying and Oil and Gas Extraction.

In conclusion, there has been some disproportionate employment gains and losses across industries in NC during the recovery from the COVID recession.  Some industry growth changes make sense and could have been predicted whether the pandemic occurred or not.  Others will require additional time to understand.  Some changes may be temporary and will reverse when the labor market loosens and/or Covid health risks fully subside.  Others may reflect a long-term change in the demand and supply for labor.